The used car market is showing signs of strength in the New Year, with first time conversions up 88% year-on-year, according to Cox Automotive.

Figures also show wholesale prices for January have reached the second highest total in the past five years, with average prices at £6,264.

Though the used car market is doing well, all sectors have identified the potential for stock availability challenges, with 56% of dealers saying stock availability in January 2020 was worse than last year.

Cox Automotive reported some franchise dealers had a fast start to the New Year, but the outlook for the rest of the quarter is less optimistic as the dealer sentiment survey suggests dealers may need to renegotiate sales figures with manufacturers come March.

There are global pressures on manufacturers with the CAFE regulations and the impact of the coronavirus on supply chains.

Cox Automotive also reported average mileage in the wholesale markets is down on much of 2019 at 62,791 in January – a -2.4% decline year-on-year.

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Average age has remained flat, but showed a seasonal 5.4% increase month-on-month, which reflects the challenges for good quality stock at the turn of the year.

NextGear Capital data, the stock funding arm for Cox Automotive, showed the average price funded increased to £7,836 – up 2.4% year-on-year.

Trade for trade platform Dealer Auction showed overall conversions were at an all-time high due to shortage of good quality stock.

Cap performance improved by 3% to 100.1%, and the average value rose by £476 in January 2020, compared with December 2019 figures.

Philip Nothard, customer insight and strategy director for Cox Automotive, said: “With an industry that is already struggling after several years of political and economic uncertainty, the news that petrol and diesel models may be banned in the UK five years earlier than originally stated, in 2035, comes as yet another challenge for manufacturers, albeit one that could be anticipated and understood in the context of today’s social and environmental debate.

“However, the addition of hybrid and plug-in hybrid vehicles into that announcement came as a big surprise for many and may well cause significant impact for manufacturers who have just two design cycles to shift their business plans. Indeed, there are many industry commentators who have suggested, however positive for the environment and air quality, it isn’t feasible to move the goalposts without significant investment into subsidising EV adoption,” he added.

Nothard also said new CAFE regulations are already having an impact on supply with some franchised dealers better placed than others.

“Of course, the new CAFE regulations are already having an impact on supply, with some franchises better placed than others. The coronavirus is also making an impression, with manufacturing plants for OE and aftermarket extending their lunar new year shut down while governments try to contain the spread of the virus. This may well cause further supply issues later into the year, depending on the duration of the shutdowns, leading to a knock-on effect in the wholesale markets,” he said.