January’s seasonal bounce in retail sales of used cars saw sales rise to 13.6, higher than 12 months ago, but well down on the 17.4 of the previous year, according to Manheim’s Dealer Dashboard.

Online enquires and test drives were all up to average levels after a poor December. All segments saw an uplift in sales with small hatchbacks and medium family experiencing the biggest increases.

John Simpson, managing director, Manheim Retail Services, said 2011 promises to be an intriguing year in the used car market.

As household budgets are hit by fuel price and VAT increases and as the Government’s cuts result in increases in unemployment, he sees consumer confidence bound to decline.

He added: “The surprise fall in GDP in Q4 2010 has meant that there will be much interest in the next set of figures in April 2011.

"A GDP bounce could help lift the gloom and get consumers back out on the high street spending again. “Another decline and the portents for a very tough year indeed are strong. Initial high street retail numbers for January are, however, encouraging.”

In the wholesale market, stock for retail values rose £398 to £8,391 despite average age rising slightly and mileage up 971 miles over January.

With average first time conversion rates up to a healthy 86%, values are higher now than the same period in both 2010 and 2009.

Dealer part-exchange values strengthened substantially, from £2,217 in December to £2,478 in January.

This 11.8% increase of £261 is partly attributed to some slightly younger (down 1.3 months) stock coming to market, although this is not across all vehicle segments.

Mike Pilkington, managing director, Manheim Remarketing, said: “More importantly, demand for good quality part-exchange vehicles is widespread and likely to remain.”