AM Online

Consistent conversion rate 'essential' in turbulent used market conditions

Conditions in the used car market are likely to remain challenging in the coming weeks.

Data from members of the National Association of Motor Auctions (NAMA) confirms that every year volumes start to increase from around the second or third week in September and peak in the first half of October just as consumer demand traditionally weakens.

However, this year the situation is likely to be exacerbated as demand may be adversely affected to a greater extent by the continuing uncertainty surrounding the economy and the pressure on consumer disposable income.

The recent summer months have seen a drop in available stock from dealer and fleet vendors and demand for the limited supply has been just sufficient for average values to fall at a seasonally steady rate and with healthy conversions being maintained.

However, as volumes rise significantly in the weeks following the registration plate change, there is no indication that demand will increase over the same period.

All available evidence shows that values invariably peak in September and fall away month by month to the year end. In this context NAMA is advising against over-valuing vehicles during the autumn, or holding on to stock in the hope values might improve.

NAMA chairman Andrew Hulme said: “Market conditions have been relatively stable over the past two months, despite the fragile confidence exhibited by consumers and wholesale buyers. That is likely to change significantly as volumes rise and buyers have a much greater choice. While well presented grade one and two vehicles continue to attract strong bidding, stock in grade three to five condition needs to be accurately valued in line with market conditions.”

NAMA vice-chairman Tim Hudson said: “As volumes rise, sellers know that it is vital to churn stock swiftly. Unsold and re-entered vehicles are an anathema to professional buyers and the NAMA data re-enforces the value in maintaining a strong and consistent conversion rate through changing market conditions.”

And NAMA council member Mike Pilkington said: “Used vehicles do not exist in a vacuum and the difficult economic conditions will be affecting used car buyers in the same way they are affecting everyone else. Every vehicle sold should be seen as a success, particularly when volumes rise in the autumn.”

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