A new DoneDeal Motor report that looks back at 2020 and forward to 2021 finds that with a crunch in supply, now is a good time to buy a new or used vehicle as prices are expected to climb. The car selling website, where a new car is listed every minute, says Brexit had an impact on used imports and contributed to the decline in new car sales as buyers were unsure of its affect on their finances. This means there are fewer fresh trade-ins and nearly new used cars (2016 – 19) in the Irish Market. 2021 will see demand will outstrip supply in and this will drive up prices. A similar trend is visible in the UK where leading car sites have seen increases of 8.5% in the price of used cars across the board.
The report, using a combination of survey responses, its own website data and official SIMI figures, points to diesel still being king – but DoneDeal’s research says one in two buyers are now open to buying hybrid or electric as their next car – up from 1 in 4 last year. DoneDeal says Competitive finance options are expected to make it easier for consumers to trade up to newer and more aspirational car types like hybrid and electric vehicles. Interestingly cash is plentiful and car buyers look set to use funds that would have been used for holidays, creche fees etc (during the pandemic), as deposits on a new car. DoneDeal’s motor report reveals an industry in crisis in terms of new car sales but one that is transforming to be future proof with the adoption of online selling. In 2021 it is not a matter of ‘if’ Irish consumers intend to buy cars online; they are buying cars online. In 2021, cars are being sold through Car dealerships entirely online, end to end and via DoneDeal.
The demand for personal transport is constant. Even in lockdown essential workers need to get around and the grocery shopping has to be done. Also cars wear out and become uneconomic to run, buyer’s requirements change with the need to upsize or downsize happening all the time. 2020 also saw a dramatic drop in the use of public transport as a result of the pandemic. The private car has never been of more value as it offers a safe environment for drivers and their bubbles to travel in. In 2020, the Motor Industry transformed. DoneDeal worked in concert with their 1,000 strong dealer network to migrate their business from bricks and mortar to online, introducing solutions around digital payment and finance that ordinarily could have taken multiple quarters or years. The industry has accelerated by years.
DoneDeal says consumers optimized every aspect of their homelife. As lockdowns brought home life into focus, Done Deal identified trends that saw consumers investing time in optimising their home space and by extension, their car. We saw demand for SUV’s, and people carriers up 300% across New and Used Stock. We saw consumers get even more specific about comfort- car leather interiors were particularly popular in 2020. We identified a real shift from electric car browsing to buying, and hybrid too has become a sustainable and savvy choice for our car buyers.
Diesel is still far from dead. Industry statistics show a changing marketplace in 2020. Diesel accounted for 43%, Petrol 37%, Hybrid 12%, Electric 4.5%, and Plug-In Hybrid 3%. Diesel remains the most popular engine type, while hybrid, electric and plug-in hybrid gained market share in 2020. Electric achieved significant growth with sales +16% Year on Year.[
In 2020, Car Dealerships moved to meet the demand of the online buyer, taking steps that might ordinarily have taken months or even years. Online has been a critical element of the car purchase journey for a number of years but in 2020, Car sellers found themselves with no other option than online . Car Dealerships found themselves rushing to enable options like ‘click and collect’ or ‘deal and deliver’ so that they could safely sell and deliver cars to customers. In 2021, we have already sold cars from Dealerships end to end via DoneDeal and we expect that online will remain a crucial part of the car purchase process. In 2020, we saw that the average price of a nearly new car (Registration 2016-2019) was €21,273. This year, the average price of a new car is €33,000. If you are looking to buy a nearly new car, you’ll find that the price gap between nearly new cars and brand new cars is closing. The reason for the narrowing price gap is because new car sales declined by 25% last year which means less nearly new cars are in circulation. Demand for nearly new is high which is driving up prices so we find some consumers see the value in making the leap to brand new vehicles. Brexit combined with recent additional fuel efficiency “NOx” charges on imports will likely see used imports fall dramatically. This loss of supply will keep used values strong in 2021 and likely 2022, so it’s not a bad time to buy a used car in terms of value retention, irrespective of the age of the car. Similar trends are visible in the UK where leading car sites have seen increases of 8.5% in the price of used cars across the board. With a crunch in new supply, it is quite likely that used vehicles will better hold their value.
Brexit will see used imports fall dramatically and this loss of supply will keep used values strong in 2021. If you are an individual or a business and you import vehicles from Britain, you are required to complete a customs declaration; pay or account for customs duty of 10% if applicable; and pay Vat at 21% prior to presenting the vehicle for registration. As is the case at present, VRT is also payable on such vehicles. According to Revenue, importation of a vehicle from Britain is now treated as an importation from a third country, that is, a non-EU country. That means completing a customs declaration, accounting for customs duty if applicable, and Vat prior to presenting the vehicle for registration. All of which can add up in time and money for the car buyer.
DoneDeal says consumers see the value in making the leap to brand new vehicles. The price gap between nearly new cars and brand new cars is closing. The reason for the narrowing price gap is because new car sales declined by 25% last year which means less nearly new cars are in circulation. Demand for nearly new is high which is driving up prices and consumers see the value in making the leap to brand new vehicles. In fact, DoneDeal website data shows that people who start out looking at nearly new cars, are more frequently going on to enquire about new cars with finance options available on DoneDeal.
New delivery methods have been adopted. People have fallen in love with getting their car delivered in the final step of the purchase. The alternative to having your car delivered to make multiple trips to the forecourt, returning to collect the car. It’s not a deal-breaker, sure, but customers love it. [Reason enough to keep a delivery option in the long run.
Diesel is in a slow decline as potential buyers look to more sustainable fuel types. Consumer intent to purchase ‘Diesel’ declined from 52% in 2019 to 29% today, while intent to purchase a Petrol engine continues to hold it’s 2019 position at 22%. Today, nearly 1 in 2 Car buyers say they would opt for a Hybrid or electric Vehicle, versus 1 in four in 2019. Over 70% of consumers who intend to buy a car valued at over 10,000, intend to buy a hybrid or electric vehicle. An indicator that those who can afford fuel alternatives to Petrol and Diesel are making the switch to more sustainable fuel types. “What kind of car is good for long distance travel” remains a top query for Irish people who will be encouraged by the significant range improvements on electric and hybrid vehicles in the last year, with more to come in 2021. Manual transmissions (59.8% of cars sold) continue to be more popular despite a decline in market share with automatic transmissions (40.09%) continuing to gain in popularity. New automatic gearboxes are very efficient and cheaper to make but another factor is worth noting, pure hybrids (HEV) and all EVs have automatic gearboxes. Another interesting nugget from the report is that car commuters don’t miss the traffic but really miss the contemplation time that commuting gave them.