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Surveys show used car sector is still buoyant

Reports say the used car market remains buoyant and continues to represent a profitable revenue stream for dealers.

Manheim’s latest market analysis is based on sales results across the 19-strong UK Manheim auction network, covering in excess of 85,000 vehicles in each quarter. The report analyses demand and prices achieved as well as age, mileage and stock turn categories.

Looking at the market as a whole (fleet/lease, manufacturer and dealer) the average age of cars sold during Q4 2006 remained static at 39 months, the fifth successive quarter where the average age has stayed unchanged.

In contrast, average mileage rose for the second quarter in a row, by 645 miles to 51,042 miles. Despite this, the average selling price remained static at £6,178.

However, this remains the highest average selling price recorded in a Manheim market analysis report, which began compiling data in Q3 2003. Manheim points out that while the proportion of the original new price retained fell, this was only fractional and follows a continuous rise over the previous 18 months.

And despite headline figures to the contrary there’s still life in the 4x4 market.

Looking at the market in 2006, the average used values of younger 4x4 vehicles have risen since 2004. This is largely due to high-value entrants, such as the Range Rover Sport and Discovery, pushing up the averages.

In the case of the older models, average values have fallen over the two-year period but not by a significant amount. Manheim attributes this to increased volumes in the market and a much greater selection of 4x4 models coming through its auction halls from a number of sources.

This, it says, puts pressure on prices of 4x4 models, which have traditionally enjoyed residual values among the highest of all the vehicle segments. Even at nearly five years old and 72,000 miles, the average 4x4 is still worth over 30% of its original cost new price.

Manheim communications director Rob Barr says: “While there may be local concerns in some city centres over punitive taxes, Manheim don’t see this destabilizing strong trading in 4x4s.”

Mirroring Manheim’s findings of a buoyant used market, BCA’s Pulse Report for Q4 2006 shows that part-exchange values averaged £3,036 over the period. It was the first quarterly increase since spring 2006, and only the second time that the £3,000 barrier had been broken. The rise over Q3 was equivalent to 8.8%.

BCA director Tony Gannon says: “Ex-fleet and lease cars are generally one-owner popular models, well-specified and maintained.”

In a separate report, direct remarketing company Vehicle Remarketing Solutions (VRS), is reporting record demand from dealers in January. Demand is up 15% year on year and it handled 3,700 dealer enquiries in January.

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