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CAP trade watch: Sales and sentiment relationship

One of the questions arising from the monthly CAP survey of retail used car sales performance is how far sentiment impacts on ‘real life’ results.

Underlying this issue is the importance of questioning anecdotal reports of market conditions. Many trade professionals are notoriously reluctant to admit to success. During the past 18 months, the CAP Used Car Performance Index has measured both sales and sentiment with a view to examining any relationship between the two.

The headline finding is that dealer sentiment is largely borne out by reality.

Certainly in the case of the Used Car Performance Index sample, dealer participants are forecasting their own future prospects with some accuracy.

It is reassuring to establish a provable link between expectations and outturn.

This time last year, dealers were asked what they considered to be the upper mileage limit on a car acquired for retail. In June 2004, split by region, the lowest average was reported by dealers in the East of England at 60,000. The highest was reported by Scottish dealers at 95,000.

This year, the picture has altered, with the Eastern dealer sample citing 70,000 as their upper mileage limit and those in Scotland reporting an apparently dramatic reduction to 60,000.

This is because the most significant difference between the two sets of results nationally is the lack of ‘no limit’ responses this year. Taking into consideration that the Used Car Performance Index sample has consistently grown in size over the intervening 12 months, and therefore improved in accuracy, the absence of ‘no limit’ responses takes on more significance. CAP will continue to monitor this year-on-year to identify any trends that may be forming.

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