The National Association of Motor Auctions (NAMA) monthly market report shows that during December average values of used cars sold at auction in the UK for all market sectors increased from £4,849 to £5,072, equivalent to a 4% increase.
Year-on-year, the average price has increased by 9% (£474).
The month-on-month price increase for the fourth month running paints a positive picture.
However the increase is exaggerated by the sale of few high priced luxury cars under 2.5 years of age.
Given the generally low volume of sales in December, the sale of these high value vehicles has had a greater effect than normal on overall average values.
December is always the slowest sales month of the year and last month was no exception. Many vendors faced the dilemma of whether to sell inventory or to hold it back until the New Year, in the hope of higher prices.
This process did limit the number of cars that were presented to trade buyers before Christmas and contributed to the unusual stability in prices over that period.
What warrants particular mention is the fact that the prices during the last quarter were unseasonably robust.
A lack of buyer choice also played into the hands of vendors who were successful in moving a few more lower condition grade cars.
The fleet and dealer part-exchange sectors better reflect the price changes between November and December as they account for around 90% of all sales.
Here we see prices for the fleet sector static and prices for dealer part-exchange cars marginally down by 1%.
Andrew Hulme, NAMA chairman said: “The first 10 trading days of the new year were a continuation of the pattern witnessed in Q3 and Q4 of 2011.
"Demand for condition grade one, two and three cars opened strongly as they remained in short supply and represent quick retail opportunities.
“Demand for condition grade four and five cars remained polarised with professional buyers being cautious about refurbishment, holding costs and future value drops.”