Despite fragility in the economy and correspondingly low con-sumer confidence it remains a fact that the current used car market is still tracking significantly above long-term trend.
The legacy of the upsurge in 2009 has now been extended by an exceptionally strong start to 2011.
This means that underlying values are more than 6% above the trend established over the past five years.
Considering the wider circumstances, a description of the market as ‘overheated’ is still applicable.
Most remarkably, early 2011 has seen values actually rising against a normal trend of depreciation for this period.
What created this was a shortage of suitable retail stock in the open market. Just as in early 2009, this forced dealers to pay premiums.
Given that context, this is a sample of the sectors forecast by Black Book:
Prestige coupé and convertible
Stronger performance than usual for this sector, as stock will become thin on the ground and dealers will be reliant on cars generated through part-exchange.
The exception is large petrol engines.
Average prices are above seasonal trends and the continuing rise in fuel costs will focus more attention.
We expect the next quarter to remain above typical seasonal patterns.
Although this sector is quite specialised, in terms of its suitability for one specific job, it too has been outperforming seasonal norms over the past couple of months.
We expect this trend to continue for at least the next quarter.
The dramatic overperformance seen in this sector during the early part of the year has eased back, but we do not expect values to weaken during early summer as much as they have historically.
This means, for example, a reduction from 2% to 1% depreciation in June. There will not be the usual high volumes entering the used market in this sector.
Despite recent years seeing strength in the middle of the year we anticipate a more negative picture, with values falling from this point through to June.
Vulnerable to rising fuel costs, short term forecasts anticipate slightly weaker performance than medium MPVs.
Looking into the future, even stock shortages cannot hold up a sector under pressure on running costs and volume set to return over the next few months.
Expect a reduction in values through to June.
We expect a continuation of late plates still benefitting from long lead times while older fleet-type vehicles follow normal seasonal patterns and reduce in value over the coming quarter.
Now past their peak – expect a reduction in values for April followed by larger than average falls for May and June, compared to previous years.