British Car Auctions reports strong trading last month as franchised dealers, desperate for a good start to the year, competed for the best quality stock.

Tom Madden, BCA director, customer affairs, said average sale prices had risen year-on-year, assisted by demand for nearly new cars.

“With a number of manufacturer sales taking place in the opening days of the year, we have already seen records falling for Peugeot and excellent results for Ford, Vauxhall, Rover, Honda and Volkswagen,” he said.

Dealers were looking for good quality stock that would sell quickly, particularly when sold fully prepared and 'ready to retail'. But average stock was being left behind, failing to sell after several visits to auction.

Tony Gannon, BCA European sales and marketing director, predicted a good year for dealers with prices stabilising. He rejected the popular view that residual values had slumped in recent years, claiming they had “softened overall”, but remained strong for the best quality stock.

“Strong bidding from dealers for good quality stock is keeping residuals high,” said Mr Gannon.

Mr Madden added: “The back-end of 2000 was typified by a strong yet admittedly selective buying market. The best stock was in demand and franchised dealers were paying good money to refresh their retail used car stock.

“This was as a result of the lower than anticipated levels of part-exchange business during September and October.” Long term, BCA believes the used car sector has considerable potential for growth.

Mr Gannon pointed to the gap between the car parc – around 29m – and the number of licence holders – some 32m. “This leaves a substantial untapped demand for private transport that will need to be fulfilled,” he said.

“I believe the vehicle parc will continue to grow. Cars are lasting longer and are better built which means they go through more transactions over their running life.

“People change their cars as often as they can – there is an opportunity for more cars to be sold to more people more often.”