Why economic uncertainty could mean an autumn watershed
With full lockdown measures in place for the whole of April and May, the impact on the used car market, albeit devastating, is not surprising. According to the latest figures released by SMMT this week, the market for second-hand cars declined by almost half in the second quarter, with just over one million units changing hands.
As lockdown eases and private buyers and sellers get back on the move, we hope to see more activity return to this market over the coming months, particularly as many people see vehicles as a safer and more reliable way to travel during the pandemic.
More worrying, however, is the news this week that the UK economy suffered its biggest decline on record in Q2. Big ticket purchases such as cars inevitably take a disproportionately bigger knock in downturns so much will depend on how quickly the economy can recover (we all hope for a v-shape but a u-shape seems more likely) and, in particular, the effect on business and consumer confidence as the inevitable cross-economy job losses kick in as the government furlough scheme tapers out. For many reasons, the end of September and beginning of October could be a watershed.
For now, economic uncertainty reigns, exacerbated by the looming end to the Brexit transition period – now just a few months away. Whilst we know we are leaving the single market and customs union, businesses still don’t know the terms of trading beyond the end of this year. We continue to call for an ambitious tariff-free FTA – and one suspects this is increasingly coming down to political will – but we are also doing what we can help members prepare for whatever comes next.
Our regular Covid-19 webinars are now being refocused on preparedness and, on Wednesday 19 August at 14:00, SMMT will be joined by representatives from the Home Office, who will discuss the government’s EU Settlement Scheme and what companies can do to support the EU nationals in their workforce. They will also provide insight into the UK’s new Points Based Immigration System, which comes into force on 1 January 2021. You can apply to attend here.