Startline Motor Finance is reporting early signs of a degree of post-lockdown, pent-up used car demand becoming apparent, citing a “detectable sense of the market just starting to rev up”. The ‘near-prime motor finance specialist’ is basing its reports on a busy February and March and on feedback that customers are buying cars ready for the summer or to collect once showrooms reopen.
It has also said that 2021 could turn out to be a “stronger than expected” year for used car sales.
Yet more optimism and brightness ahead for the car retail sector, then.
The news prompted NTK Motors to dig a bit deeper into the meaning of the phrase ‘near-prime motor finance specialist’ as the ‘near-prime’ customer represents a major element of the credit market, thought to be between 20%-27% of all adults.
Global accountancy firm PWC says there is no standard definition of a near-prime customer but broadly speaking the customer pays near-prime interest rates on their credit cards, and/or have a thin credit history because they haven’t previously applied for credit or an incomplete credit record; or consumers who perceive themselves to be near-prime – people who do not expect to be able to borrow from mainstream lenders, irrespective of their actual credit rating or history.
So this is a key audience for the motor retail sector and if this category of customer is signalling movement on purchases then we have to sit up and take notice. Startline Motor Finance CEO, Paul Burgess, said: “We’re not talking about a dam burst of demand suddenly being unleashed in the market or perhaps even the kind of sudden, strong demand that we saw last summer but there’s a detectable sense of the market just starting to rev up.
“What is probably happening is that there is a general sense of optimism as the vaccination programme rolls out relatively quickly and a gradual return to some kind of normality looks to be in reach. This inevitably feeds through into increased consumer confidence which is a major influence on used car sales.”
He also says that some customers who have been hit financially by the pandemic have channelled any spare money into cars alongside people buying for work or personal needs.
“What is interesting is that there are signs of both these groups increasing in propensity to purchase in a post-lockdown sense,” says Burgess. “Again, we are not forecasting a massive unleashing of demand but there are enough signs to be optimistic about the Spring and Summer markets.”