A switch of focus at manufacturers means production levels may not dramatically rise in the future, leaving the average new car delivery time still at around six months, says the Vehicle Remarketing Association (VRA). 

The VRA says carmakers do not want to return to the kinds of production levels seen pre-Covid

Philip Nothard, chair, outlined that the last few years had taught at least some manufacturers that there were greater profits to be made from reducing supply and keeping new vehicle prices high.  

“For decades, car manufacturing has been a volume business, not just for mainstream manufacturers but for prestige and even luxury brands, too. Building more was seen as the best way to make money.  

“However, when supply was cut substantially during the pandemic, many carmakers found that they were able to make equivalent or greater profits despite selling fewer units. Reduced volumes meant that they could keep prices higher.”  

Nothard added that for some manufacturers at least, this was now an ongoing strategy.  

“While they do not want to strangle supply to current levels, with waiting lists of 12 months or longer for a new car, they do not want to return to the kinds of production levels seen pre-Covid.”  

He continued: “Production will certainly rise but probably only to a level where the average new car delivery time is perhaps six months. A return to anything resembling pre-pandemic volumes seems unlikely, as far as we can tell.”  

Such a move will likely have a significant impact on the used car sector too, changing the availability of stock in the longer term and meaning that supplies may never return to previous levels.  

While it’s been assumed that the reduced numbers of cars in the market will turn around at some point and return to some kind of normality, it’s looking less and less likely this will happen.  

“Really, the only unknown variable in this situation is whether other parties will move into the space vacated by manufacturers who are reducing volume and take their place. These could be carmakers who have an existing presence or new entrants from China and elsewhere. It’s going to be an interesting few years.”  

It’s a subject that was discussed in detail by speakers at this year’s VRA Annual General Meeting, which was held last week.  

“The remarketing sector is facing a number of challenges and reduced volumes are certainly one of them. It’s probably only now that it is becoming clear how much volumes are reducing and what the long-terms situation will look like,” emphasised Nothard.