Buying a new car, are we at the best time right now?

Are we at the best time to buy a new car? As dealerships begin to reopen their doors, some deals may be expected, but are we right to think so? Unless the industry starts moving more quickly and manufacturers and dealers begin to ‘unfreeze’ their accounts and turn existing stock into sales, every sign suggests that bargain-hunting customers will still have to wait for their long-awaited ‘steals’.

Some signs indicate that manufacturers’ aim is to improve profitability rather than cut profit margins. This measure looks set to remain in place for most of this year, 2020.

However, the position may change as factories return to their usual production, especially if consumer demand remains low. At that point the fight usually begins, and the evidence from the last recession is that there will be bargains, especially among premium brands, which fell out of favour in 2008 when buyers focused on cost-conscious and practical models.

Will used car sales soar?

When new car sales fall, used car sales generally grow, and we expect that to be particularly true over the next 12–18 months as the economic crisis unfolds.

The trend will be driven not only by consumers’ desire to save money, but also because there will be practically no waiting times (new car orders with 12-week lead times have roughly doubled as a result of factory closures), and because retailers (at least initially) are desperate to sell units that have sat on their forecourts for two or three months, in theory losing value simply by ageing.

Furthermore, it is important to note that most retailers these days have access to large stocks of high-quality cars, fed by leasing cycles, and the margins on these cars are sometimes greater than those on new cars. Given the situation we are living through, it is very possible that used car sales will increase because of this large number of cars that can be offered at a price that attracts customers.

Could the value of classic cars and supercars stagnate or fall?

For years people have talked about a bubble in the market, but it has never burst significantly. Now it could be that moment. Today, halfway through the crisis, the signals are very mixed. Few prices are rising, but some of the most desirable cars are holding firm. Others, however, are undoubtedly falling, not yet to very low prices, but certainly by substantial double-digit percentages.

Some dealers have said they expect this to continue, arguing that very wealthy people are generally insulated during a crisis. But they have a stake in saying so, of course; on the other side is a somewhat more pessimistic view. While genuine classic cars and outstanding supercars will hold their value, those on the fringes of an oversupplied market will struggle.