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Sellers 'starve' market to create demand in January

Auctions have got busier in the past few weeks as dealers look to stock their forecourts in advance of a predicted lift in values next year. Most anticipate a busy market in January.

Last year saw a number of dealers disposing of cars during November and December in order to make the year-end books look good, but with the excitement of the New Year and a fresh start, values subsequently rose.

This left dealers having to pay more money to replenish stock levels with cars similar to those they had disposed only a matter of weeks before.

The situation is not only affecting dealers. Sellers are indicating that in order to return maximum profit and generate a buoyant market, they will hold cars back from the market this month.

This will starve the market and create an appetite for buying in January. This may be good practice for sellers but its success depends on retail buyers delving into their pockets.

Otherwise, as many in the trade will already have stocked up in December, January could see an influx of used cars creating an oversupply situation in the market.

One potential problem area, which is often neglected while the market is buoyant, is that of average condition vehicles.

While buyers are busy soaking up the remainder of Cap Clean cars, average condition models are being ignored unless sold cheap. The outcome is that they are building up in the auction halls.

This is proving to be a major concern, not only for auction companies but also for sellers, as these vehicles rarely improve upon the bids received at their first entry at auction.

Despite this, some sellers are trying to hold out for better prices. This results in their vehicles trawling from one auction to another, tying up the company's capital in the process.

Mileage and condition used to be a problem mainly on big executive cars but it now affects all vehicles, especially with the acceptable cut off figure now around 75,000 miles. Although trade buyers are actively purchasing stock, the retail market remains slow, in keeping with the time of year.

Many dealers are reporting little or no showroom activity. They are gearing up for January by concentrating their efforts on active marketing campaigns and ensuring good levels of stock with the right model mix.

This industry relies totally on retail buyers. They should be out there in force in the New Year to give the market a much-needed lift.

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