CAP Automotive has said it has witnessed pressure mount on used car margins in recent months, as low quality stock has increased the refurbishment costs for dealers, in its trade values platform Black Book Live.
According to the commentary, dealers generally saw positive activity in terms of showroom visits and online activity in May, but finding high quality stock proved a challenge.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
CAP blamed the drought in high quality stock on PCP exchanges – which meant the best quality cars were immediately turned around for retail sale, rather than finding their way into the trade market.
As a result the stock available to the open market is of ‘lower-than-ideal quality,’ CAP said.
This has resulted in a softening of trade and therefore values. In May, most used car segment values dropped between 1.4% and 2.8%. The luxury and electric segments fell by slightly more, 3% and 4.1% respectively.
Black Book Live senior editor Derren Martin said: "When the pre-registered cars from March find their way back into the used car market they are likely to be priced as attractively as possible by dealers to ensure they do not end up with overaged stock.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData"This sometimes means they reappear in the market at lower prices than slightly older equivalents, when taking into account low deposit offers and other incentives, and this unnatural dynamic inevitably affects older values if the situation is sustained."
In a statement CAP said it was not expecting the ongoing reductions in trade values to depart from the pattern established in recent months.
Martin said:" Continued downward pricing movements are likely across the board, with volumes in the market not likely to decline any time soon.
"However, these downward movements are only likely to be in-line with the movements over the last 2 months and are nothing untoward or unexpected.
"At an individual model range level there will be those which depart from the pattern by either over or under-performing against the trend and Black Book Live will continue to drill into those details on a daily basis."
