Wholesalers miss out on take-back inventory, Shoreham says

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Shoreham Vehicle Auctions, Lancing, West Sussex. [dropcap][/dropcap]

The used wholesalers are being starved of redemptions, according to Shoreham Vehicle Auctions.

It states that motorists are monetizing their cars instead of giving them back to financial firms.

Drivers who are behind on their monthly payments avoid vehicle seizures by turning to a growing number of car buying service companies that buy their used vehicle online and settle any unpaid finances.

With used cars in short supply and prices high, motorists are making hundreds or even thousands of pounds from sales while protecting their creditworthiness.

The industry had expected tens of thousands of used cars to hit the market in 2021 and 2022 after car take-backs were suspended by the Financial Conduct Authority (FCA) during the pandemic.

The FCA warned lenders not to consider a repossession because drivers have either lost their jobs or their earning potential has been impacted.

The FCA lifted its ban on January 31, 2021, but the steady stream of used cars expected from auction houses never reached the open market.

“This is another problem that the used car industry has had to contend with. The wholesalers are starved of tens of thousands of used cars that don’t find their way onto the free wholesale market. Car buying service companies buy them, pay off the outstanding financing and sell them directly to consumers.

“It’s good news for motorists who have defaulted on their car repayments, but this trend has contributed to a shortage of used cars in the wholesale market,” said Alex Wright, managing director of Shoreham Vehicle Auctions.

“Many drivers are discouraged from replacing their used car by rising household bills, but as running costs increase as their cars age, they will be forced to buy a replacement.

“We don’t think winter used car demand will skyrocket until drivers get a better handle on how challenges like rising energy prices will affect their available cash flow. However, used cars are still in short supply, so we will not see a major drop in prices. It will be spring 2023 before we have a better idea of ​​future used car trends and this will depend largely on whether new car supply improves.”

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