From FT Alphaville:
My kingdom for a used carWhy a growing inventory shortage could be about to cause havoc in the European used car market.
Something very strange is happening in the used car market. Dealers from across the world — from as far afield as the UK to the US and Germany — are suddenly finding it exceedingly difficult to source inventory.
Reports of fast appreciating prices at auction have been popping up sporadically for a couple of weeks now. But in the last few days observations about the supply crunch have become even more numerous. Auto Trader, the UK’s largest second-hand car dealing platform, even launched a webinar on May 19 entitled “sourcing stock in a shortage”.
So what’s going on? Is the used car bidding war an indicator of inflationary times to come or something more transient as the market adjusts to a post-pandemic environment? Also worth asking: how much of a black swan moment are appreciating prices in the used car market likely to be for the auto financing industry? The context of course is that personal contract purchase agreements (car loans known as PCPs) and leases have pre-determined buyback values baked into their contracts, all of them based on assumptions that used cars only depreciate over time....
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