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Hunt for stock after Q3’s highs and lows

Dealers are having to search hard to find quality three- and four-year-old cars, but there are also positive trends in the used sector at the beginning of autumn.

BCA’s Pulse Report says the year’s third quarter was a mixture of “highs and lows”. One high was a change in the wholesale market between August and September.

Average values for fleet and lease cars hit record levels (£7,190) in September, with BCA reporting that the £7,000 barrier was broken for the first time. The Q3 figure eclipsed the previous record, which was £6,750 in September 2005.

This was in sharp contrast with the month of August, when average values dipped below £6,500 for the first time in six months.

“A large spike in demand saw average fleet and lease values rise by nearly £1,000 between August and September,” says BCA.

“With relatively thin stocks in the marketplace, competition has been strong for product in the wholesale market, particularly for retail-quality stock from corporate vendors.”

BCA rival Manheim also reports a supply shortage, which means cars are selling more quickly and at higher prices. It points to a flattening of the new car market in the March and September plate changes, which is causing a similar levelling in the used car market.

#AM_ART_SPLIT# “The market is not now awash with used cars in the following months,” says Rob Barr, Manheim director, planning and marketing. “There will still be a seasonal ebb and flow, but we will not have a big residuals downturn at Christmas followed by a surge in January.”

Stephen Lamb, chief executive of Gordon Lamb, says supply of nearly new volume cars and older used cars is good. He adds: “We are, however, short of three-year-old niche-brand cars up to 40,000 miles, and demand for them is strong. And that is keeping the prices up.”

Lamb says people in his used car sales team do not have time to go to auctions, but he is considering appointing a group buyer because of the shortage of niche stock.

Paul Williams, chief executive of Bristol Street Group, also reports strong demand for good cars aged between two and four years old.

“Some people won’t buy new because these cars are terrific value if you can find them,” he says. “But we are experiencing a big swing out of used vehicles into new ones which manufacturers have made so attractive on price.”

Williams’ strategy on used stock is to concentrate on margin rather than volume. “We’re likely to cut our used stock back still further in the final quarter, and then by December start to rebuild it ready for January,” he says.

#AM_ART_SPLIT# In its analysis of Q3, BCA says the average value for three-year-old, 60,000-mile cars was £6,611, which was £14 behind Q2’s record figure of £6,625.

Average mileage rose by over 1,400 against the previous quarter, which BCA says more than accounts for the small drop in values.

Q3 values were 4.8% ahead of the same quarter last year and the average performance of fleet and lease cars against the CAP ‘clean’ price rose by 1.5 points to record the year’s highest figure. The third quarter also marked a three-year high for CAP values.

For the second consecutive quarter, the nearly new sector set a new record, at £15,280. This took the figure above £15,000 for the first time and was up by nearly £4,000 year-on-year.

Part-exchange values in Q3 were down 5.2% (£155) to £2,790, the second successive fall between quarters. Year-on-year, Q3 was £11 ahead of 2005 and £53 ahead of 2004.

BCA says there was a reason: “Part-exchange product in Q3 had the highest combination of age and mileage seen since early 2004.

“It supports the view that many younger, lower-mileage part-exchange vehicles were being retailed, rather than traded, due to the overall shortage of stock.”

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