Average used car trade values fell by 1.8% in December, according to figures from the CAP Black Book, but it was a smaller drop than normal for this time of year.
The unusual stability in used car prices at a time when larger falls are typically recorded reflects a continuing delicate balance between supply and demand in what is still an essentially fragile market.
Dealers have reported to CAP they are finding it “consistently difficult” to source cars of sufficient quality for retail, which has forced many to pay more for vehicles with minor damage and absorb the cost of reconditioning.
The problem is partly fuelled by the ongoing troubles in the new car market, which remains weak.
This has forced franchise dealers to compete with their independent counterparts in the open market in actively sourcing used car stock due to the lack of part-exchanges that would normally be generated through new car sales.
According to Black Book, a recent snapshot of more than 100 dealers’ experience of sourcing retail quality stock revealed 73% of independents having difficulty, compared with 59% of franchised dealers, who benefit from first choice of manufacturer used stock.
In terms of stock levels, 80% of independents described their own as too low, compared with just 47% of their franchised counterparts.
Crucially, however, these complaints revolve around the quality rather than quantity of vehicles available. One of the issues CAP has identified is the number of ex-fleet cars entering the market that fail to qualify as prime retail stock.
Black Book identifies one of the main factors behind this as fleets disposing of many ‘tired’ vehicles as they take advantage of manufacturer incentives on new replacements.
CAP also believes the on-going stability of the market will be heavily dependent on the volume of nearly new cars which enter the marketplace in the coming weeks, driven by the hunger in some quarters to meet new car registration targets.
Mark Bulmer, Black Book Editor, said: “Much will depend on the behaviour of manufacturers in relation to pre-reg and late plate supply.
“One major volume player has a vast quantity of metal to shift which, at recent rates, could take up to 9 months to move on.
“In general there is a lot of late plate stock around and this was illustrated recently when scrutiny of one major trade and retail website revealed 88,000 cars available up to one year old.
“That said, there is still very significant demand for older vehicles around the £3-4,000 price mark and those who specialise in turning these around for retail are enjoying very strong trading.
“Bearing in mind the cautionary note around pre-registering and late plate supply levels we still expect dealers to be out in the marketplace actively seeking stock in the lead up to the New Year and possibly into January. After all, the lessons of being caught short in early 2009 will not be easily forgotten.”