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Used car market analysis: December 18, 2009

There is a good deal of uncertainty as the end of such an unusual year approaches, but the bottom line is that there is a good deal of positive sentiment in the trade overall.

The key to this is retail activity and there is certainly ongoing demand from private customers for used cars.

The supermarkets and other large trade buyers are in the market for stock and there seems to be a general determination to hit the ground running at the start of the new year.

Unsurprisingly this positive mood is tempered with some caution. But demand is sufficient to push the values close to or around December book levels.

Some factors have simultaneously negative and positive status, depending on your standpoint. For example, there are over-age cars that now need to be liquidated, but which were bought on the crest of the rising values wave.

While that spells pain for the seller it does mean the appearance of some very good quality stock when it is sorely needed.

What matters most now is the level of retail activity in January.

Most in the trade expect an immediate flurry of additional interest from customers, but the question is how long that will last.

The still low levels of late plate stock remains good news for used values in general.

But the economic headlines about Britain’s snail’s pace struggle out of recession are becoming gloomier, which may have a further negative influence on big ticket purchases.

At the time of writing, the imminent announcement of a return to ‘normal’ VAT levels may also affect consumer’s confidence.

Anyone who hopes for a strong surge in values for January is likely to be disappointed. Dealer stocks are higher than last year, which means the sudden explosion in demand that fuelled this year’s rises is unlikely to be repeated.

But there are disposers who are so confident values will increase that they are holding back vehicles ready to take advantage of at least some strengthening in prices in the coming weeks.

There are many vehicles which are still worth more than they were a year ago.

How long this will last is determined by retail customers and how they feel in a weak economic climate in an election year. 

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