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CAP tradewatch: Used car market is healthy

While the news headlines report a High Street retail industry feeling the pinch of reducing consumer confidence, there are few signs that the used car retail market is similarly affected.

According to the latest CAP Used Car Performance Index, retail used car sales are tracking very close to last year’s figures.

This measure is based on a regionally weighted sample of independent used car dealers. Looking back over the first six months of 2005, the retail used car market is in a similar shape to 2004, which was considered a successful year by most dealers.

There is a small gap between year-on-year results for May and June, however, this appears not to be statistically significant. In terms of actual market movement, results indicate a similar trend to last year, with a March peak slowing down through April into May, followed by a small upturn in June.

While retail used car sales remain healthy, for some time now we have been facing an apparent paradox of strong retail demand coupled with falling trade values. Are dealers are taking advantage of high supply levels to drive down trade prices and possibly growing retail margins? To help investigate this, dealers were asked whether in the past 12 months their retail margins had grown, reduced or remained unchanged.

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