The Retail Motor Industry's Society of Motor Auctions (SMA) is advising dealers to “set realistic targets” for selling stock through auctions due to the softening market.

The SMA, which represents the majority of the UK's motor auctions sector, believes increased used car volumes could lead to a drop in the value of used cars, which has been high in recent months.

Head of the SMA, Louise Wallis, said: “Sellers at motor auctions have enjoyed the best possible conditions over recent months, with reduced supply and good demand from buyers, resulting in high conversion rates and strong prices.

“Inevitably the rising prices must impact on consumer demand, and it is likely that this will affect price in the wholesale markets.”

Wallis believes the market could soften soon, with increased volumes from lease and contract hire sources, plus additional dealer part-exchange vehicles reaching remarketing channels in the weeks ahead.

Wallis added: “There will be greater choice and more competition for the buyer's attention and any vehicles which appear over-priced relative to their age and condition may not sell at the same price levels as they have been.”

Wallis emphasised that it is important for sellers to maintain a dialogue with their auction partner: “If market conditions change, don't be the last one to find out with a growing list of unsolds and re-entries.

“Re-appraise your stock if necessary, manage your inventory through the appropriate channel, be prepared to invest in pre-sale preparation and get it sold for true market value first time.”