AM Online

1999: one of the worst years in history

Most people would agree that 1999 has been one of the worst trading years in memory. It began with even the most experienced trade people apparently mis-reading the market, and hardly anybody is seeing the year out without a few bruises.

Without needing to make any excuses, it has been many years since the trade has experienced so many different kinds of pressure.

First, the twin-plate system was a fundamentally destabilising factor - the like of which we haven't seen for a long time. The twin-plate system was never going to help values but for it to come in a year when values were already taking a hammering was certainly unfortunate timing.

There has been the orchestrated campaign from consumer pressure groups and the media on new car pricing. Although the impact on retail demand of that particular factor is difficult to measure, there is a good deal of anecdotal evidence to show it has affected the market.

Then there was the Competition Commission inquiry into car pricing, among other issues, which underpinned all of the public concern and added to the regular anti-car market headlines.

Clearly, all this not only damaged retail confidence but created serious nerves in the trade, which meant the values problem became self-fuelling. But it's all history now and what concerns us is what the immediate future holds. It seems that everybody has had enough negativity. For the first time in almost a year, there is an almost universal mood of optimism in the trade.

There are three major reasons for this. First, there is a common view that used values are now as low as they can possibly be and that, in most cases, prices must have bottomed out. Historically, when this point is reached, prices do tend to rise.

Second, many see the list price reductions in December as the first dominoes in a long chain. At the end of the day, my view is that this is a positive move in attempting to stir retail punters out of their slumber because it can only serve to increase retail interest.

The third factor is perhaps the least scientific but possibly just as significant. It is what we have been calling the 'Millennium Effect'. This is simply the feel-good factor generated by such a rare event and it is just the kind of scenario which sees people stirred into retail action.

What all of these factors translate into is a genuine mood of optimism and determination, with most people expecting good things from the first quarter of 2000. However, the reality is that January will be the make or break month, setting the tone for at least the first half of the year.

Indeed, many of the large disposers were holding on to stock at the end of the year in anticipation of a better month in January.

This positive trade mood is the vital ingredient for kick-starting the market but, without the necessary follow-up of positive retail activity, the danger is that it could all turn into a damp squib - but we do not believe it will. Our expectations are closely in line with the mood and it is with some confidence that we, too, look forward to better times.

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