Average used car prices increased by just over 2% in September according to the latest figures from the National Association of Motor Auctions.
Three year old fleet cars saw a slightly larger price increase of 3% but interim figures issued by NAMA show that by the end of the second week in October, the 3% gain in the fleet sector had been completely reversed.
Average conversion rates reached a four month high of 77% last month, but by the second week of October a combination of additional auction supply and a reduction in demand, eroded this figure to close to 70% and falling.
NAMA advised vendors to focus on their least attractive vehicles and invest in appearance re-conditioning to generate buyer interest. It believes this will address any build up of unsold, multiple entered stock that is starting to “clog the arteries” of the wholesale market.
Andrew Hulme, NAMA chairman, said: “Professional wholesale and auction buyers have more choice than at any time since the late spring and demand has become increasingly polarised.
“Values remain healthy for Grade 1 and 2 cars largely due to the ongoing shortage of retail ready stock, but there is little appetite for Grade 4 and 5 stock unless it is realistically valued to sell.
“Buyers factor in the real cost of refurbishment and downtime financing and simply deduct that from their bidding, because they want cars to retail today, not to sit in refurb shops for up to 28 days.”
NAMA said sellers must recognise the realities of the market with CAP Average condition cars unlikely to sell at CAP Clean prices.
It’s latest report said: “If further proof were needed, September’s data records a price differential of £900 between first time sales and subsequent sales.
“There is every reason to believe there will be an increase in poor quality stock coming into the market over the next eigh weeks, yet little indication that retail activity and wholesale demand will improve during that period.
“It will ultimately be seen as an act of good management if these conditions are interpreted pragmatically and all remarketing teams need to ask themselves “why should we sell a vehicle for less next month when we can sell it today for more?” We can be sure that Finance Directors will be asking the very same questions.”