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Buoyant market sees values rise

The buoyancy seen in the used car market in the first half of February continued throughout the month, with the average %CAP achieved actually increasing by 1.2%.  

The %CAP for the first 10 days of the month for all 2005-2008 plate disposals was 102.6%, rising to 103.8% for the whole month. 

This strength is reflected in CAP’s market sentiment indices, with dealer footfall rising 0.7 points to 108.2.  

Leasing de-fleets are enjoying record conversion rates, with many sales achieving 100% with an average conversion rate of 90.8%. 

Converted leasing de-fleet sales have also acheived an additional 5.1% CAP, up to a mean 100.2% – the highest average figure yet reported by respondents to CAP’s Leasing Survey.  

The volume three-year-old plate remains the 2005 55, with 4,631 sales, compared to 4,187 sales of the 2006 55 plate.
The %CAP achieved across most plates is consistent as buyers clamour for stock. 

The newer 2008 plates are commanding a premium. The 08 plate is averaging 105.2% with the 58 reaching 107.1%. Research suggests these plates are of particular interest to buyers from other right-hand drive markets, particularly Eire, thanks to the exchange rate.

Despite the consistent buoyancy, there is a wide variance in the differing performances seen by each manufacturer.  

Topping the list is Mini, with an average 114.8%CAP, although it has historically consistently achieved over CAP due to the large take-up of options –meaning very few cars sold are ‘standard specification’.  

Following closely is stablemate BMW, which averaged just over 107% for 2005-2008 plates, with its X product particularly strong.  Land Rover enjoyed similarly strong disposals (average 107.5%CAP) as the resurgence in 4x4 values continues.  

Notable among the weaker sales performance was Smart, which averaged a comparatively low 94%CAP.  Smart’s underperformance has no doubt contributed to the reversal of the city car sector’s recent strength. 

City cars were the weakest sector in March’s Black Book, with 2006 55 60k values rising by only 1.5% compared to an overall average rise of 3.3%.  Small executives saw the biggest increases, averaging 5.5% for 05 55, closely followed by 4x4s with values up by a mean 4.2%.

 Previously there has been a pronounced trend relating to CO2/VED, with the lower emission vehicles achieving a higher %CAP.  Last month’s buying activity has diluted this trend, with only the 23 sales of sub 100g/km vehicles achieving a notable premium (107.8%CAP). 

There was very little difference between petrol and diesel, with %CAP achieved being 104% and 103.6% respectively.  Hybrid vehicles continue to underperform, achieving an average 96.5% .  

Vehicles priced in the £5,000 and £6,000 price brackets are still the most sought after, achieving 104.7% and 104.9%CAP respectively, with these price brackets now encompassing core three-year-old de-fleet models, as well as models which have dropped into this price range as a result of the unprecedented depreciation seen over the past  year.  

Whereas very few people could have predicted this sudden upsurge in demand and pricing, in hindsight one can consider the contributory factors:

  • Car values at an all-time low following 2008’s exceptional levels of depreciation
  • Low stock levels
  • Reduced levels of pre-
  • registration and daily rental/short-cycle business
  • The shift from new cars to used (many dealers have revisited the old ‘sell one used for every one new’ business model)
  • The need to source stock elsewhere as the expected reduced 09-plate order banks will mean reduced levels of part-exchange stock
  • The influx of buyers from other right-hand drive markets as well as those from Eastern European markets
  • n Interest rate cuts resulting in reduced investment returns and increased available cash
  • The release of the pent-up demand from last year as buyers delayed ‘big-ticket’ purchases while they ass-essed their personal risk from the downturn.
  • The one caveat to add to this would be that if volume was to re-enter the market, which should happen with the 2006 06 de-fleets, and this increase in stock combines with a fall in retail activity then market dynamics would force values down.
     

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