Post on 31/08/2021
The car market after covid-19 was impacted in a variety of ways. The industry was dealt a massive blow by the Covid-19 pandemic and the lockdowns that ensued. Sales fell around the world and in particular Europe with an 80% reduction in car sales throughout the pandemic. The lockdowns shut car show rooms reducing demand for new cars dramatically, as reported in more depth at McKinsey & Company and Automotive World. Car finance during the pandemic was no exception to the effects of Covid-19, with demand falling and the economy coming to a standstill, many car finance companies closed the doors temporarily and stopped lending.
However, we at Marsh Finance we kept our doors open and continued to lend our own money, owing to our commitment to support the public in their search for car finance at a time when they possibly needed it most. The physical experience of buying a car was removed, which pushed many to either avoid purchasing a car until restrictions lifted or browsing online car showrooms which have grown significantly since covid-19.
This move to online show rooms has undoubtedly changed the industry for the future, pushing many finance companies to improve their online offerings to the customer. At Marsh Finance, this has led us to begin the development process of customer specific online portals that house all the information you could need regarding your car finance.
In addition to a growth in online interest in cars, demand has surprisingly transitioned from the new car to the used car market with prices for used cars on the rise. For you the customer, the car market is now one that has a much greater online presence in addition to in-person show rooms and is slowly rebuilding towards levels seen before the pandemic. The shift in popularity to used cars has and will have a strong impact on the whole car market, but why has the market for used cars grown exponentially?
Although demand reduced during lockdown it never truly went away, with customers able to browse used cars online. Also, as people spent less due to lockdown closures and holiday cancellations, money was saved that could be spent on a car purchase. Lockdowns not only altered demand but disrupted the supply chain of car production and so the supply of new cars fell slightly during the pandemic. With a steady supply of used cars already in circulation, demand rose for a fixed supply of cars and as such prices increased.
Used cars have a higher mileage than that of a new car, and so are cheaper in price. Customers that are content with a higher mileage can effectively buy a car for cheaper than it would be if it was new. For many who look to purchase their dream car, buying it used may be more appealing if the mileage is not too high as you can save considerable amounts of money for effectively a similar standard of car. In the purchase of a used car, customers avoid VAT which has been absorbed by the first owner of the car providing further savings to the customer over buying a new car with the added VAT.
With budget in mind, the options available to a used car customer are broader than for that of a new car customer. Setting a certain price level will see a greater range of used cars available than new cars. Certain makes and models may no longer be in production and so buying a used car is the only way to get a certain model.
Perhaps the greatest strength for used cars is their availability. There is no wait for a used car, opposed to the wait for a new car to be built which can be a lengthy process. Buying a used car allows you to get out on the road much quicker.
The car market and car finance during the pandemic changed dramatically with significant demand for used cars emerging. This is in no small part down to the lockdown measures the pandemic brought and the halting of new car production, combined with the ease and availability of used car purchases. This has had knock on effects for car finance companies, although here at Marsh we continued to serve the public’s needs and lend, as mentioned earlier, but many did not. Due to this, it is important for you the customer to search for further information regarding the used car finance industry. This information can be accessed here alongside our other blogs. Additionally, if you are looking to start your car finance journey today, contact us and we can start you on the path to your dream car.