Used car market experts said they don’t expect used car prices to fall due to the difficulties in finding new cars and consumers’ tendency to wait and see.
Representatives of the used car market said that in August the market stagnated and consumers switched to “wait-and-see” mode, not expecting further price declines.
Due to global issues, the problem of zero vehicle availability remains. Consumers who cannot find a new or brand new vehicle on the market are also turning to used cars. It was a question of curiosity as to whether this demand would hold and price expectations.
“32 PERCENT GROWTH REGISTERED”
Birkan Çalışkan, Director of Second-Hand and Fleet Operations at Otokoç Automotive, said in his statement that although the first 6 months of the year saw a difficult period in meeting demand in the used car market, growth of 32 percent in terms of the company has achieved the business results compared to last year.
Çalışkan explained that the said high demand trend continued until the eve of the festival, Çalışkan said, “However, the rise in lending rates and credibility difficulties after the return of the holiday, as well as rising prices, led to a slight drop in consumer demand. Looking at the beginning of August you can say that we are dealing with a used market that is in the same situation.”
Caliskan explained that the problems in the delivery of new vehicles since the beginning of 2022, the demand in the used car market and, accordingly, the increase in sales volumes, “however, given the slowdown that began in July and the similar demand in early August, it can be said that this effect has disappeared. In fact, the increase in listings, considered a key indicator, and the fact that the number of used cars currently for sale is up 20 percent compared to a month ago are also indicators that a stock accumulation is starting to take place in the used market.”
“An average price drop of 7 percent is observed”
Çalışkan explained that the demand for second-hand goods has slowed down a bit: “This brings with it a certain drop in prices. Looking from the beginning of July to the beginning of August, the market sees an average price drop of 7 percent. In today’s highly volatile economic conditions, it is not easy to make any predictions for the very near future. However, I think that the high cost inventories in the hands of sellers will unfortunately not cause prices to drop too much,” he said.
Noting that the rate-dependent increase in new car prices is continuing, Çalışkan said, “Although there seems to be some downward price movements in the coming period due to inventory building, I think prices have the potential to increase again in the next few years generally increase in the medium and long term with the impact of macroeconomics.
Çalışkan, in reference to the expectation of regulation in the SCT that occurred in the consumer’s last period, can be seen as “an update of the SCT scales and not an SCT reduction” with the expression “regulation”. In the event that such a staggering rule is enacted by the authorities, depending on the update rate, some vehicles may fall into a lower SCT segment, making the price a bit more affordable.
“CONSUMERS ARE GOING TO A WAIT AND SEE POLICY”
Tuluy Noyan, the general manager of letgo Car Operations, said the used car market lagged behind the norm in the last week of July with the SCT agenda, but fluctuations in the exchange rate and SCT discourse temporarily affected prices.
“As markets have resisted such agendas, their impact remains limited in the current environment,” Noyan said, noting that the discount’s impact is limited as there are far fewer new vehicles on the market compared to the past.
Noyan explained that consumers with such agendas have adopted a “wait and see” policy and the market has been on hold for a while, but they expect normalization in August.
“Some see the industry as an investment area”
Noting that lately there has been a crowd buying and selling used cars outside of the ordinary consumer and viewing this sector as an area of investment, Noyan said, “People in the used car sector have responded to the market cooling off with the recent agenda , by offering a discount ranging from 3-5 percent. . On the other hand, if we evaluate the market developments in terms of new registrations and prices, we see that the brands have increased their prices by up to 10 percent. Therefore, it would be correct to expect an increase in the used car market after the initial shock effect is over.”
Tuluy Noyan stated that they do not expect any further decline in used car prices any time soon, saying:
“The expectation of SCT regulation impacted the market very quickly. This type of news is immediately reflected in the market. From the last week of July, sales across the market dropped. Then there was a partial price drop in the 3 to 5 percent range and stopped there. However, we expect a normalization in August. On the other hand, developments on the market; When we evaluate in terms of new vehicle listings and prices, we see that brands’ price increases are up to 10 percent. It would therefore be correct to expect an increase in the used car market after the first shock effect.”
“It is assumed that there are no zero vehicles on the market”
Orhan Ülgür, CEO of 2plan, said: “The recession that started before the holiday continues in August, affecting developments in the automotive and economic sectors. Expectations of an SCT lower, the recent rise in exchange rates and the inaccessible outlook for credit are causing the consumer to adopt a “wait and see” attitude. The recession deepened as a result of the build-up of inventories in the hands of second-hand companies and the slowdown in business-to-business trade.
“Whatever the reason, there is currently a perception that there is no such thing as a ‘zero vehicle’ in the automotive market,” Ülgür said, adding that even with small returns, the overall price trend will be upward, be it instant or for a few days.
“EXPLANATIONS ABOUT SCT CREATE EXPECTATIONS”
Melih Mutlu, General Manager of Otoshops, noted that the supply problems in the new car market directly lead to increases in the price and demand of used cars, and that the variety of used cars regularly decreases due to the inability to bring new vehicles to the market.
Mutlu said: “As demand has not met supply in the market, prices have risen by about 50 percent since the beginning of the year. Since the used cars of the high model year remained at the level of the new car prices, a stagnation in the consumer’s propensity to buy could be observed after the festival. It can be said that the statements made about the SCT at the end of July caused consumer anticipation to start August sluggishly compared to other months.
Mutlu, who also shared his expectations regarding the price development, concluded his words as follows:
“We can pinpoint the drop in demand as the reason why some of the consumers are expecting SCT and some of them are struggling to get credit or avoid expensive financing. As long as the drop in demand continues, used car prices will fall. However, the exchange rate-related increase in new car prices will trigger demand and price increases for used cars again. The reflection of the regulation, which will come at a time of limited vehicle availability, will also be limited in the new car market. With this expectation in the used market, prices began to stabilize and buying opportunities began to arise for consumers.” (AA)
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