Low supply and high demand have caused car prices to soar.. Whether this pricing trend will continue is yet to be understood.
This month, new cars will be registered with a "22" registration tag, but with escalating issues now impacting global supply chains, will lack of supply be longer than forecasted?
How can automotive insurance and finance-lending companies assess whether they have priced risk accurately, not just competitively?
Continued pressures in 2022
- Semiconductor shortage
- Escalating fuel prices
- 30-year high inflation rate
- Cost of living pressures and rising energy costs
- The halt of car production in the Ukraine and Russia
- Recovery from Covid 19
The Russian invasion of Ukraine is starting to have a notable impact on the car industry in the UK and across Europe. Ukraine’s production of wire harnesses, neon gas and other metals are a critical part of car manufacturing. Porsche, BMW and Volkswagen have all cut or halted production of some make/models. Throughout the industry, the OEMs recovery is stalling.
Some OEMs have fared better than others securing parts required for certain make, model, derivatives but are still only building to order.
The ripple effects of these market pressures will be felt by most consumers, who may reduce leisure spending, concentrating their hard-earned cash on the day-to-day must-haves. Looking for reductions and the most affordable and competitive deals when purchasing insurance or financing a vehicle.
Whilst lack of supply is driving higher margins for dealers this is only sustainable whilst demand is strong. Should the cost of living put a further squeeze on wallets, demand will reduce creating a downward pressure on pricing and bringing an equilibrium to the market.
Understanding current and future vehicle values is a central challenge for finance-lenders and Insurance, claims, and underwriting companies as they look to win and maintain business. Getting this wrong could be costly creating negative equity and bad outcomes for consumers as well as hitting the bottom line.
Using emerging technologies with AI, and machine learning is undoubtedly the answer. Easy and immediate access to vital information will ensure a competitive status. This is where data and their valuable insights carry tremendous weight. The ability to see how a vehicle will be valued at any date in time is as important as its current market value.
Cazoo Data Services helps automotive insurance and finance-lending companies see the full picture.
Our award winning products are designed for the automotive industry. We offer whole market data with an unbiased data driven view allowing finance and Insurance companies full visibility of the entire market, enabling competitive offers and improved customer service.