This year’s market downturn has had an impact and this article aims to offer some insight into general conditions.
My research during the early part of May began with a large closed sale by a manufacturer-linked finance company, with around 250 vehicles.
The turnout was poor and even the online buyers were nowhere to be seen.
This is of particular concern, given that it has often been the online bidding that has kept some sales ticking over this year, especially when the winter weather was preventing many from physically attending.
What bidding there was could be described only as lacklustre and the sound of the hammer falling was almost non-existent.
Sometimes at the sales when the auctioneer says “On sale!” you will get a surge of bidding activity, but there was none of that and it is fair to say the sale might as well have been cancelled.
My next port of call was a large rental company to see how it had fared over the bank holiday period.
It confirmed that it had endured the quietest three-week period since the dark days of 2008.
However, the bank holiday period also saw a reduction of 10,000 units in the overall number of cars offered for sale via the main online platform.
This suggested that three or four more weeks of retail selling could bring dealer stock levels back to ‘normal’ and lead to a reduction in the number of auction entries.
I know of more than one dealer group with stocks reaching £10 million over its normal limits and consequently the cheque book is locked away.
Car supermarkets, on the other hand, have been making hay and buying all the best stock, leaving main dealers to struggle with their over-valued stock.
The following week I returned to auction and a big open sale.
The conversion rate was said to be around 30% but my gut feeling would be nearer to 10%.
Where I did see cars genuinely selling, around 88% of CAP seemed about the best in terms of winning bids.
I have since spoken to several manufacturers and dealer groups where we always receive an honest appraisal of the market that we can trust and they confirm our view that, at the current rate, there will be little or no real improvement until July at best.
However, if we see another influx of late-plate cars to the market – which is highly probable – values might continue to fall in July too.
In summary, the problem at present is too much stock in the market on all plates with insufficient customer demand to make any significant inroads into the surplus.
Additionally, the struggling new car market inevitably poses the risk of further tactical registrations which – if they do appear – will only serve to delay any recovery.