Preparations for autumn
commence as values rise in August.
Go deeper with GlobalData
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
BCA’s latest figures show used
values rising in August as supply reduced and professional buyers
prepared for the busy autumn period.
There was more speculative buying
in the month than had been seen for some time, with the volume
buyers – dealer groups and supermarkets – anticipating that there
will be an upturn in retail demand during September, allied to a
possible shortfall of supply in the early days of the month.
Increases in average values were
recorded in the fleet, lease and part-exchange sectors. While
average values decreased in the nearly-new sector this was largely
as a result of changing model mix over the period.
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By GlobalDataAs a result, the average used car
value at BCA recorded a modest increase to £5,905 in August from
£5,784 in July. The rise of £121 was equivalent to a 2 percent
increase over the month, while performance against CAP Clean
increased by one and a half points to 96.28 percent. It is notable
that new cars recorded their worst August monthly sales figures for
44 years over the same period and further proof that used cars
remain the bedrock of profitability for retail dealers.
Year-on-year values remain behind
as they have done for several months. In fact, August recorded the
largest negative variance seen this year, with a deficit of £318
against the 2009 figure of £6,223; the latter figure being the peak
of the market last year. By contrast, values remain well ahead
compared to two years ago when values reached the then nadir of
£4,756 in August 2008. Only October 2008 saw values fall
further.
The market is reverting much more
to type than seen in the previous two years, which really were
extraordinary in terms of the fall and subsequent recovery. If the
trends continue into September with plenty of demand and reduced
supply, prices are likely to remain firm in the short-term.
However, values are likely to be under more pressure from late
September until the Christmas period.
Up to one year
old
The late-year, low-mileage sector
came under some pressure in August. The proximity of the plate
change and the continued proliferation of new car deals will have
had an effect, as will the growing realisations over the imminent
spending review. Many consumers will be wary about committing to
long-term finance deals or spending on big ticket items in the
current climate.
As a result there was a somewhat
confused picture on sub-one year values in August, exacerbated by a
changing model mix at BCA. The niche markets for coupes,
convertibles and roadsters all declined by varying degrees, as
would be expected given the changing season and the fact this is
probably not the time to be purchasing a reward car.
4×4 values held up strongly, while
estate values were broadly static. MPV values rose sharply with
both large and small models in demand, but average values fell for
large and small hatchbacks and large saloons compared to the
previous month.
One-to-three years
old
The one to three year old sector
had one of its strongest months since the spring with average
values for most mainstream vehicles holding up well compared to
July.
Saloons, hatchbacks, estates and
4x4s all outperformed the previous month, with the latter sector
seeing values improve by nearly 10 percent. Outside the 4×4 sector
most mainstream models averaged somewhere between 96 percent and 99
percent of CAP Clean.
In contrast to last month, the
niche sector models such as coupes, roadsters and convertibles all
saw values fall back against the previous month and there was some
pressure on CAP comparisons for the latter two body types.
Three-to-five years
old
There was something of a
renaissance in values across the three to five year old sector with
seven out of eleven body types improving in value and the remaining
four barely moving compared to the previous month.
The best performers were large
MPVs, estates, 4x4s and coupes which all improved sharply. The
bigger MPV models added more than 7 percent in value over the
month. Hatchback values were broadly static as were roadsters and
convertibles, with small saloons down by just over one percent.
