AM Online

CAP Tradewatch: Prices level out after eight months of rises

Used car trade values are at last reaching a plateau, following eight months of rises.

At the time of writing (September 23), it was expected that Black Book would show a market that has generally levelled out.

Some vehicles may still have some headroom left, but in the main average values will stabilise.

This begs the question of whether we will now see the market shift back into reverse, in the face of rising unemployment and slow economic recovery, or if stability will be maintained.

Key to the market dynamic is still the balance between supply and demand.

This year has been characterised by the unusual picture of reducing retail demand coupled with rising used car values.

This has been caused entirely by supply always remaining just behind demand levels. 

Therefore, the issue now is whether or not this will continue.

Research confirms that dealers who handle new and used cars have put the latter on the back burner in recent weeks to concentrate on new deliveries.

Scrappage has generated significant new business, but reports in the media that it has played a part in this year’s rise in used values have represented more the chase for a good story than reflecting reality.

Aside from generally reducing the size of the used car parc, scrappage has played no part in the increase of values for benchmark three to four-year-old stock.

What matters now, as we head toward the quietest time of the year for retail used car demand is whether supply will finally overtake demand and cause prices to weaken.

All our recent research suggests there will be no sudden surges in supply.

The current dynamic is seeing the return of some cherry picking as dealers at last find themselves more able to pass over cars requiring significant refurbishment.

But returns from auction indicate that many desirable cars are still frequently achieving higher than CAP Clean values, with more vendors investing in cosmetic repairs to add to the desirability of their stock.

 

If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.

Comment as guest


Login  /  Register

Comments

No comments have been made yet.