BCA’s latest Pulse report shows that average values rose in December in a short month for trading that was also very short of stock.

With only three full weeks of trading and business trailing off in the week before Christmas, entered and sold volumes fell sharply as the markets wound up for Christmas and the snow took its toll.

As a result, average values climbed as professional buyers competed strongly to secure stock for the new year and beat the anticipated January price rises.

The average used car value at BCA in December rose by £113 to £5,905 from the £5,792 recorded in Novem-ber (and October).

Performance against CAP Clean improved by over a point to 97.4% from 96.3% the previous month.

Year-on-year, values are £283 behind December 2009, a fall of 4.7%. Values remain well ahead compared to December two years ago, however, with £1,042 separating the two figures.

BCA communications director Tony Gannon said: “December often sees a surge in prices as professional dealers acquire stock in readiness for the New Year and 2010 was no exception. 

“However, the weather’s influence was a significant factor as it left remarketing centres very short of stock – on top of the seasonal slowdown and reduced trading period.”

Fleet values increased by £120 (1.7%) to £7,235, ending two consecutive monthly falls. Year-on-year values are ahead by £210 (3%), with fleet cars averaging 96.72% of CAP Clean in December.

Short supply and decent demand buoyed values in the part-exchange sector, which climbed from £2,648 to £2,705 in December – the joint highest value recorded last year and the second highest value on record.

Nearly-new average values climbed from £18,204 to £21,691, with CAP performance up 5% to nearly 107%.

Gannon added “January generally brings a further uplift in activity, and this is typically sustained until the Easter period – which usually represents a watershed in demand.

"The months immediately ahead are unlikely to see any significant increase in available volumes, which means average values should remain relatively stable in the short term.”

Gannon warned however “The economy is best described as fragile and we will be seeing the early effects of the VAT increase alongside continuing rising fuel costs, which means most families will have a little less flexibility in their budgets than last year.

"It’s not the kind of environment that is likely to generate much growth in big ticket sales, so we shouldn’t expect to see any major peaks in used car demand during the first quarter at least.”