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Profit opportunities 'exploited to the full'

The past few weeks have seen a slight easing in retail demand leading to reduced demand from trade buyers.

Many have apportioned the blame for this slow-down on a general lack of confidence in the economy, brought about by a delayed election and the foot and mouth crisis, as well as the impact of the Easter holiday period.

The trade can be all too quick to talk the job down but lower demand can not be wholly attributed to factors such as this. There are seasonal factors at play and many dealers have prepared themselves for this movement.

Some group buyers we have spoken to have been carefully watching their stock levels for the past four weeks; several slowed down their buying activity three to four weeks ago.

This observation has been backed by auction results with conversion rates easing and performance against Cap Clean following the same pattern.

Most people anticipate that business will remain steady rather than buoyant over the next few months. The signs are that, despite the slow-down, we will not see the kind of stalling that characterised last year.

There are, as always, areas of optimism with clean, low mileage cars still in demand. Most diesel engine cars are still performing well if sensibly equipped and coloured and do not have spaceship mileage.

People carriers are reasonably well sought after, while the supermini sector is another area of strength.

Many superminis now offer attractive levels of spec and comfort. Combined with their reasonable running costs, they hold strong appeal for the retail punter.

Cars like the Volkswagen Polo, Peugeot 206 and Vauxhall Corsa are doing well and tempting many buyers to move out of the mid-range sector. The values of most of these vehicles have remained steady and look to continue in the same vein in the near future.

The prices of X-plate vehicles, however, are starting to settle down as Y-plates make their presence felt, though they are hitting the used car market in relatively small numbers.

In the executive sector, we are finding that the gap between basic spec, flat coloured manual cars and a good spec equivalent is widening. Retail punters are now accustomed to more equipment as standard, even on the bread and butter family saloons and this is being reflected in the guide values.

Caution must also be exercised when evaluating older part exchanges in the seven to 10 year-old category.

The retail market in this sector is shrinking further as younger, later plate cars seem more affordable and there is a general reluctance by the trade to take on the risk of reconditioning older vehicles to bring them up to retail standard.

This trend is also being reflected in the auction arena with bids on older, less attractive vehicles noticeably absent.

Daren Wiseman is senior editor of Cap Black Book.

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