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Used car market analysis: February 25, 2011

As anticipated, January finished strongly from a trade and retail perspective and auction hammer prices showed no weakness moving into February.

This month has lost the frantic feel of the previous month as buyers start to realise that paying strong money for cars that may be hard to retail on does not make sound business sense.

Conversion rates have consequently eased a little this month, but vendors have shown little sign of recognising the need to move nimbly as the market again slows a little.

As always, the longer they hold out for unrealistically high prices the more they will be caught out and the more impatient trade buyers will be.

Large 4x4 models are a good example of vendors holding out for top money now they have become accustomed to their seemingly unstoppable rise.

Although this sector does remain strong it is no longer showing the overall large gain in values it has in previous months, which means vendors should be ready to accept reasonable bids instead of hold out for ever higher prices.

The more compact 4x4 models have faired better and are still seeing high demand.

The main problem the market now faces is the growing volume of high mileage, below average condition vehicles while good quality, easy to retail examples are still in short supply.

This picture will not change the further into the year we go.

Another issue once again rearing its head is pre-reg.

Manufacturers have, on the whole, found themselves behind where they need to be to reach their anticipated targets and it is now believed that several are already gearing up to make sure they don’t find themselves slipping in the battle for market share.

This injection of late-plate stock into the market will help to keep used car sites stocked with cars but it will also cool used car values a little.

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