AM Online

Used car boom pushes up prices

As February drew to a close there were no signs of the used market weakening and Black Book for March registered one of the most significant general used price rises in recent memory. 

It is no exaggeration to describe conditions in the used car market of the first two months in 2009 as unprecedented.
Although February is typically a time of lower-than-usual stock flow into the open market, the sheer shortage of available cars has led to remarkably competitive bidding. 

Independent dealers are complaining of franchise dealers encroaching onto their usual territory and pushing up prices.
But with new car order books for March looking desperately thin, and therefore no sign of sufficient retailable part-exchanges on the horizon, they have no choice but to join the buying fray.

Since the current upswing began, the industry has been attempting to gauge when – rather than if – it will end, given that deteriorating economic conditions and rising unemployment remain an unavoidable fact. 

Nobody was prepared for the current market strength at this point in the year and therefore nobody is able to securely make a call on how long it will continue. 

Given that restricted volume is playing a major part in price buoyancy, much will hang on the level of de-fleeting in March. 

Disposal sources in the leasing sector are all insisting that they do not expect to release as much volume in March as in recent years, although rumours abound in the trade that a lot of cars are being ‘kept back, somewhere’. 

However, rumours are inevitable in unprecedented circumstances and there is so far no evidence to substantiate such a claim. 

The consensus in the trade is that current conditions will continue at least into April. 

Although vigorous trade and retail activity is to be welcomed in general, the current market is still proving extremely tough for many retail dealers. And even more so while credit support for many businesses remains severely restricted. 

But add to this the fact that consumers remain reluctant to pay above ‘price points’ that have become the accepted norm and the only room for manoeuvre is on margin. 

These are therefore still difficult times for most.

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