"What is becoming increasingly clear from recent events and trends is that the balance between the new and used markets is becoming ever more relevant and May’s new registration figures continue the recent trend."

The past few months have provided extensive evidence that the used car market has peaked following the dramatic first quarter of 2009.

As can be seen in chart no.1, CAP’s tracking of 3yr-old disposals shows sales performance levelling off after April’s dramatic rise in Black Book values, with 2006 06 plate disposals averaging 99.1% and 98.8% of CAP Clean in April and May respectively.

Many have partly attributed the notable first quarter of the year to a shortage of available used stock.

However, actual analysis of year-to-date used sales volumes paints a slightly different picture.

Disposals volumes collated by CAP for January to May inclusive shows a 7% increase on the same period in 2008.

Rather than fewer cars actually being sold, it is the significantly higher conversion rates causing reduced levels of auction re-entry that is causing a perception of reduced sales & stock. 

Whereas this time last year conversion rates around the 60% mark were the norm, conversion rates of 100% were commonplace in March and have now settled around an average 80%.

Dealers re-stocking from last year coincided with increased retail demand as buyers who delayed large purchases as the recession took hold turned to the used market as the more cost-effective way to change cars.

Retail demand for used cars continues to be high, with additional impetus having definitely been given by the Scrappage scheme, although those manufacturers with smaller models are definitely benefiting most from the scheme, with CAP’s Research team confirming particularly positive feedback from Toyota, Fiat and Kia dealers.

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