Vehicle valuations company Vipdata has knocked
an average of 4% of its used car values for July following a
dramatic shift in market sentiment.
The company reports that after a strong start to
the year, the market suddenly changed in late April around the time
of the extended bank holidays and the Royal wedding.
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Traders noticed a lot of unsold cars on the
market and became much more selective about buying, and the auction
houses became less well attended. Bad stock also began to appear
with a lot of poorly maintained cars available, which either failed
to sell or sold for far less than ‘ready to retail’ cars.
Vipdata points a finger at trade guides for
contributing to the decline, saying that their bullish tactics when
delivering used values sometimes inadvertently showed artificially
high prices. It says leasing companies, dealer groups and the trade
in general use the guide prices as a benchmark when selling through
various channels, and if the guide prices are too high, the cars
won’t be sold – increasing the number of cars at auction, making
the used car market even worse.
Only the best, late low-mileage stock is
currently selling at reasonable prices and cars that need
preparation (which would have sold earlier in the year) are now
undesirable.
The report also says that used light commercial
vehicle sales are going through their usual seasonal slowdown and
it has reduced values in July by 1%. Vipdata says that most traders
are only buying LCVs where they know they’ve got an end-user buyer
or ‘taking a chance as long as it’s cheap’.
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