In line with latest statistics published in Motor
Finance, BCA’s Tim Naylor offers his analysis of April’s price
moves at the auction block.
Sometimes, the numbers only give half the
picture. A cursory glance at the figures by body shape for April
suggests a fairly bullish marketplace, with plenty of demand and
rising month-on-month prices.
Go deeper with GlobalData
In fact, the opposite is true, because average
used car sold values fell in April, with both fleet/lease and part
exchange vehicles falling in price. Sold volumes also declined
month-on-month and conversions fell dramatically. Performance
against CAP Clean dropped sharply, from 95.9% across the board in
March, to 92.8%.
While the monthly figures hinted at some
increasing price pressure, the weekly figures threw that trend into
sharp relief. In week 14, values averaged over £6,000 across the
board at BCA; by week 17 values had tumbled to £4,950. Over the
same period, average CAP performance fell from 95.8% in week 14,
down to 89.8% in week 17.
Buyer confidence has been quite fragile in the
wholesale markets, because the retail sector has reported slowing
footfall, with economic uncertainty, rising fuel costs and
inflation taking their toll. As a result, average used car values
have fallen and sold volumes have come under pressure. In addition,
April was an extraordinary month due to the Bank Holidays and fine
weather, which disrupted the typical trading patterns.
This might lead to a sustained period of price
pressure similar to that experienced in 2008. However, the market
is more robust and leaner than it was then, and the volumes
available for remarketing are lower. As always, the balance between
supply and demand will be the key influence on prices, and it will
be a few more weeks before we see if this is a blip or a trend. For
the wholesale sector to improve, there needs to be increased
consumer confidence and more dynamic and sustained levels of
activity in the used retail markets.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataUnder one year old
Across the board, the nearly-new sector saw
values improve from £19,152 to £19,619 – the £467 increase
representing a 2.4% rise. Model mix will have been largely
responsible for the changes in this sector, as volumes are so low.
Performance against CAP Clean also fell by one and a half points to
101.29%.
In terms of month-on-month price
performance, volume sectors held up well, with saloons and
hatchbacks posting improved values, and MPVs broadly level.
Unsurprisingly, convertibles and roadsters
benefited from the hot weather (plus a series of special sales
sections at BCA) and values climbed quite sharply.
Estates and 4x4s stalled, while coupe
values fell quite sharply – although model mix was probably behind
this.
Two to three years old
While fleet values fell across the board by
1.7% to £7,413, the real story was the decline in sold volumes,
down by 19% compared to March. Falling conversion rates generate
increasing numbers of re-entries for fleet sellers, back into a
market that was getting short of demand in the first place.
So while the month-on-month figures look
rosy, with all almost body types showing an improvement compared to
March, we have to consider the ‘X’ factor – the not-solds, and make
a judgement on how they are impacting on the market performance. If
those vehicles had been sold at a lower value, it would have
dragged the average price performance right down.
Three to five years
old
Overall, there was a relatively more
substantial decline in the value of older cars, typified by the
part-exchange sector, where values fell by 4.3% on average, the
third consecutive monthly fall this year. The budget sector has
been strong for many months, but there are signs, even here, that
the market is running out of steam.
