The latest ONS Consumer Prices Index (CPI) data for September has just been published and it made for some very interesting reading – particularly the effect ‘Transport’ has had on the figures. Reading more into the current state of the market, you can’t help but see just how important the automotive industry is to an economy, whether it’s in boom times or bust.
Before we get going though, it’s worth a quick refresher of what the CPI actually is and quoting Investopedia:
The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
During September, the ONS data found that Transport costs and restaurant and café prices (driven by the ‘Eat Out to Help Out’ scheme) had the greatest influence on the numbers for the month. However, one of the key take-out lines from the report states: “The contribution from the purchase of vehicles [within Transport overall] was solely because of second-hand cars, where prices have risen by 2.1% between August and September 2020, compared with a 1.4% fall between the same two months a year ago. This is widely reported to be because of increased demand for used cars as people seek alternatives to public transport.”
Warrantywise, the UK’s leading used-car warranty provider adds credible evidence to the ONS findings. Kate Coathup, Warrantywise Marketing Manager, said: “Warrantywise has seen a big jump in enquiries and new customers choosing our renowned used car warranty plan. What we are seeing in the market is a big shift in transport usage patterns, as vast numbers of people are no longer commuting into busy cities on public transport as often – if at all.
“This has necessitated the need for cost-effective transport still, hence why we’re seeing such strong demand for pre-owned cars, especially those that are outside of their manufacturer warranty period. It is encouraging to see and just goes to show how fundamentally important cars and the car industry are in keeping the economy moving.”
The LCV sector too is seeing record numbers in average used van prices with vehicle remarketing firm Aston Barclay reporting a whopping 26% rise in average values.
Geoff Flood, Aston Barclay’s national LCV manager, said: “The market has never seen a 26% rise before and from the high demand and lack of supply we are continuing to experience at auction the van price boom will continue into 2021. We are also hearing that some new vans are suffering from long lead times which will mean prolonged replacement cycles and heavier demand on used vans which will keep prices sky-high.”
Transport needs will fluctuate – and Torque has seen and experienced it first-hand when supporting a diverse array of clients in the automotive trade – but the one constant is that it adapts to meet the need. It always does, even in the face of a global pandemic. Let’s not forget Brexit in the equation though as combined these two external forces on the market will be the biggest test yet…