Adrian Rushmore, managing editor at Glass’s, looks at the most likely scenario facing the market in the months ahead.
"To some extent history is always repeated in the final quarter because there are the same elements in the mix. September usually accounts for around 17% of annual new car sales, and this creates a surge of part-exchanges and defleets.
At the same time there is the start of a seasonal decline in used car sales with November and December marking the low points for the year.
However, in this current economic climate the trade is holding its breath to see the extent of the Q4 downturn and how this will compare to previous years.
Most dealers report that this September has been more challenging than 2010.
The depressed new retail sales trend appears to have continued, perhaps somewhat unsurprisingly when the Society of Motor Manufacturers and Traders year to August registration figures show the sector is down 16.3%.
With the vast majority of consumers still suffering severe pressure on income, it’s difficult to see what would have encouraged them to purchase cars in September.
The knock-on effect is that dealers have fewer part-exchanges to retail from forecourts or to re-sell into the wholesale market.
The auctions are also likely to experience a slight reduction in supply because, this year, an increasing number of dealers are keeping more of their part exchanges to put on the forecourt, and additionally a greater number are choosing not to trade their over age stock.
The other area affecting the outlook is new sales to the fleet sector.
Here, registration statistics are more positive, with the year to August figures showing an improvement of 3.3%.
If this improvement has been sustained throughout September there will be an additional contribution of an extra 5,000 cars.
Neither should we forget that many new models are on order lead times of three months or more – meaning the used car is not available to market for this period of time.
The changing dynamics of new car sales will impact the used car market in two ways.
Firstly, there will be a different mix of cars entering the auction halls, with supply expected to be significantly less at the beginning of the quarter.
It is customary for dealer part exchanges to arrive from the middle of September with a peak in supply taking place during the early part of October.
The influx of defleets does not get into full swing until the first week in October and the hammer may not have fallen on many of these cars hands until November.
And so, dealers visiting the auctions this year are likely to find greater numbers of high mileage three to four year old cars as a proportion of total supply.
The other influence will be one of price.
During the first half of October, the lower supply of dealer part-exchanges may serve to slow the fall in prices. It would only be when the defleets arrive in increasing numbers that prices fall at an accelerated rate.
On the basis of previous trends and the factors outlined, it would be reasonable to suggest that movements this year for three year old cars could be a 2% fall in October and 5% in November.
However, if new fleet sales are more than 3% up, or if used retail business is more depressed than most believe, the November reduction could be slightly worse.
In either case, there may well be an extended period of calm before a short storm in November."