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Small hatchbacks lead way

January saw the usual seasonal upward bounce in the retail used car market reports Manheim’s dealer dashboard, with sales up 48% compared to December and enquiries and test drives both up by more than 50%.

However, sales conversions were generally down across the board, although the small hatchback sector saw a modest 1% growth.

The strongest performance overall came in the small hatchback segment, which saw the largest growth in enquiries, test drives and sales following the New Year break.

Andy Coulthurst, managing director for Manheim’s classified site, said: “Year-on-year, the figures aren’t particularly encouraging, with overall retail performance down 20%.

“Was this a reflection on the snowy start to the year?

"Or a continuation of 2012 trends?

"Only time will tell but wholesale demand seems to suggest an underlying level of confidence in the retail market.”

In the wholesale used car market, the current trend of values, age and mileage all increasing has continued, and conversion rates are on the rise.

Part-exchange vehicles are at their highest ever value and nearly-new vehicles are at a five-month high, although nowhere near their peak of March 2012.

Despite the wintry conditions, demand has been high for wholesale stock and Manheim recorded its best ever January after selling the highest volume of vehicles in the company’s 92-year history.

Daren Wiseman, general manager – Manheim Seller Advance, said data trends show retailers are still opting for smaller, more economical hatchbacks and medium family cars over the less economical larger vehicles.

However, Manheim has also seen an increase in the sales conversion rates for the older and cheaper large vehicle.

Gavin Smith, co-founder and director at Manheim owned, said the advantage of current market conditions, including the shortage of stock, is that franchised dealers are yielding better profits from trade vehicle disposal.

“In fact, the more competitive retail market place means that getting the best possible trade-in value could be the difference between a profit and a loss on a sale,” he added.

In January there was a sharp £206 rise in the average value of a used vehicle compared to December, with premium branded vehicle values also rising in the region of £250.

Many franchised dealers were typically making between £275 and £352 profit on part exchanges in January, compared to £184 and £237 in December.

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