Tim Naylor, who edits the
monthly Pulse report, looks at the latest set of BCA
figures for Motor Finance in terms of the wider
market
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In many ways, the used car market is
assuming the mantle of normality, but in the context of what we
have seen over the past 24 months or so, the figures almost feel
contrary to what we should expect.
Used car price patterns in 2008 –
generally down – and 2009 – generally up –have been potentially
confusing to market watchers. A reduced volume of cars reaching the
remarketing sector combined with a changing model mix has sent
mixed messages, with values rising when they might have been
expected to fall and vice-versa.
April is very typical of this. Average
values across the board rose, with a very similar mix of vehicles
compared to the previous month. Average fleet and nearly new values
continued to rise, although there was some pressure in the
part-exchange market – where values fell in all sectors.
However, looking at the weekly value
figures may give a better indication of where the market is going.
Values fell week by week in April, in the immediate post-Easter
period as increased volumes reached the market. March was the
highest new car registration month for two years with growth in all
market sectors. This has inevitably resulted in incremental volumes
coming into the used car wholesale market from both dealer part
exchanges and corporate defleets which started to appear after the
Easter holiday in mid-April.
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By GlobalDataIn a competitive market arena, rising
volumes will almost inevitably lead to reduced values and in the
four weeks since Easter, we have seen consecutive weekly increases
in auction entry, falls in conversion rates and a reduction in both
actual prices and performance against CAP.
In many ways, normal service has been
resumed, following the unusual patterns seen last year when the
market just kept rising until the autumn. This year is likely to
follow the pattern of previous typical years, with softer demand
through the summer months.
We do not expect anything like the
meltdown of 2008 but the coming months will not be as easy as those
enjoyed in the first quarter. History tells us that prices come
under pressure at this time of year and there are some signs that
is already happening. A still fragile economy coupled with the
aftermath of the General Election will not help matters, so do not
be surprised if there is some pressure on used vehicle values in
the weeks and months to come.
Average Fleet & Lease values rose for the fourth month
running, with £278 (3.6%) added to the average value in April.
Values increased from £7,593 to £7,871, although performance
against CAP Clean fell for the first time since November from 99.1%
to 96.9%.
