While used car values fell sharply
early in 2008, prices were less volatile later in the year as they
reached a level that the market felt confident to trade at. This
year, January brought a huge upturn of interest in used cars and
vans and demand was reflected in individual sale conversions
(sale-to-entry ratio) that were often well in excess of 80 percent,
with 100 percent not unusual.

BCA’s latest Pulse report showed that
average used car values rose by £300 in January compared to
December, yet year-on-year figures remain behind by around £650.
Average values for fleet/lease cars rose by £248 (4.6 percent)
while average part-exchange values climbed by just £55 (2.7
percent). Nearly-new values continued to fall – January saw close
to £1,500 come off the average value compared to December, although
CAP performance improved to above ‘Clean’ for the first time in
nearly a year.

Large 4×4 values have risen steadily
since July of last year and are now at a 12-month high. Average
values for saloons have climbed for the past three months, but
remain well behind where they were a year ago. Hatchback values, by
contrast, really have not moved much in the past 12 months.
Notably, however, there has been some minor growth in values over
the last three months.

With three consecutive months of
price rises across the widest basket of cars, it is tempting to
suggest that a recovery in average used price is on the way.
However, January is traditionally a strong month and the rise in
December was marginal – just £12 month-on-month.

Stock availability has affected
prices. Supplies from the corporate sector are down, as are dealer
part-exchange volumes.

Our dealer customers inform us there
is currently a disconnect between retail activity, which is
slightly better, and wholesale activity, which is significantly
better. Currently, there is no sign of wholesale demand slowing
down, and any recovery will depend on sustained retail demand
experienced by dealers. In terms of the used car market, an air of
cautious optimism would be the best to adopt, based on what we have
seen so far in 2009.

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Tony Gannon, communications
director, BCA