The story of the used car market in 2009 has undoubtedly been one of rising values. The bleak state of values in 2008 created much concern and, with the recession causing manufacturer and dealer casualties, optimism for 2009 was not high. However, 2009 has seen the used car market recover to a much more stable position.
Throughout the year CAP has seen evidence of strong disposals at auction. March saw the largest over-performance when compared to that month’s Black Book values, with disposals achieving an average 106.5% CAP (See chart below). For most of the rest of 2009 sales of three-year-old cars typically achieved the 100% CAP mark.
The leasing companies have reported good performance against CAP, with ex-fleet disposals averaging more than 100% from February to September. Leasing company conversion rates have been significantly up on 2008.
And while dealers may have had a more competitive time sourcing and buying cars due to low levels of available stock, those surveyed by CAP have on the whole reported consistently high levels of showroom traffic and an increase in used vehicle sales.
This strength in the market has been reflected in CAP Black Book’s average value movements – up 24.2% from December 08 to September 09.
The last two months have since seen average movements fall, but most values remain
significantly higher than the same time last year.
One of the most spectacular tales has been that of the 4x4 sector. By the end of 2008 4x4 values had plummeted. In December 08 a three-year-old 4x4 averaged in value at £8,707, whereas by December 09 the same vehicle was valued at £11,039. It was not the only success. In fact, all sectors’ average values at three years old are up.
But why was 2009 such a good year? For most of the year consumer confidence has been higher. This has been further aided by the scrappage scheme which has been a success for the new car market and has had an encouraging effect on consumer confidence in the used car market.
However a major driving force behind rising values has been supply. Demand outstripped supply and competition for the best cars and deals increased.
While the majority of 2009 has seen average values rise, the last two months have seen values fall, with values falling by an average 4.1% into December’s Black Book. November and December’s decreases may only be part of a re-adjustment of values which have risen too much over the year.
However it is also possible that this could be the first signs of a difficult new year to come for the used car market.