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CAP used car market analysis: January 2011

The market has certainly changed over the last quarter in comparison with the depressed picture during the summer.

October saw stock levels remain low until the third week, when late 60 plate arrivals landed in the dealer network.

And, for the first time in the year, not all the best stock was sold at open market. Many went straight to supermarkets as sellers attempted to achieve a higher return.

November brought the buyers out in force, seeking to acquire stock to meet the New Year while avoiding any anticipated January price hikes.

Research consistently revealed retailers keeping stock levels well above normal November levels.

There was also a small increase in retail interest and although, in truth, the impending VAT rise is irrelevant to retail used car buyers it is believed many thought they should move to replace their cars before it was introduced.

An emerging trend is some companies are changing how they account for stock at year end. Traditonally, stock levels reduce at the end of the year on the principle that the fewer cars you have in stock, the less year end write-down comes out of your profits.

This has been changing in recent years and was demonstrated more strongly than ever this year.

The early December cold snap may have kept many indoors, but once the roads reopened buyers kept coming. One major group reported the internet made a big difference, keeping the enquiries coming.

The auction conversion rate in December was incredibly strong for the season, in some instances hitting 90%.

Some vendors took advantage of the appetite for stock and were not afraid of holding off on bidders until the right prices were achieved.

It would be surprising if the auction houses did not record one of their best Decembers on record.

This year has started off quite strongly, in terms of buying activity, although there is not the same ‘panic buying’ that we have seen in other years.

This will undoubtedly have been eased by the drive to buy before the New Year.

Some dealers reported a busy Christmas and early New Year and these were seen eagerly replacing sold stock.

Early research suggests good conversion rates and values for good stock, typically 3% above CAP Clean.

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