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Used car demand starts to weaken

BCA’s latest Pulse report shows that the headline average used car value declined by 0.7% in March, although year-on-year values were up by more than 17%.  

For the fourth month running, average used car values remained at £7,000 or more as the market con-tinued to be short of quality stock.

Across the board, used cars averaged £7,000 last month, down by £56 compared to February, but £1,026 (17.1%) ahead of March 2012.

March 2013 recorded the fourth highest average monthly value since Pulse began reporting in 2005. 

Fleet and lease values dipped slightly from the record levels achieved in February, while dealer part-exchange values climbed marginally.

However, post-Easter, buyer demand has weakened and conversion rates have fallen in the first week of April, suggesting there will be some pressure on values in the weeks ahead.

Simon Henstock, BCA’s UK operations director, said: “Although average values continue at near record levels, prices are high largely as a result of the constricted supply rather than strong demand.

"When seasonal variations result in the available volumes rising, the effects are quite quickly seen in the remarketing arena.”

He added: “With volumes increas-ing quite significantly in March, we saw pressure on conversion rates and a notable reluctance for trade buyers to bid as strongly on poorly presented vehicles.

"Cars requiring any significant degree of cosmetic work have been hit the hardest and need to be sensibly valued – or pre-sale smart prepared – to attract buyers’ attention.

In contrast, values for well-presented retail quality vehicles continue at often exceptional levels, outperforming price guide expectations by a considerable margin.

“Typically this time of year brings a softening in demand combined with an upswing in supply, so we expect to see continuing pressure on values and conversion rates.”

Fleet and lease cars averaged £8,734 in March, a fall of £117 (1.3%) compared to February.

CAP performance fell by more than a point to 97.6%, while retained value against original MRP (manufacturers retail price) fell slightly to 42.5% across the fleet and lease sector at an average of 40 months and 46,000 miles.

Year-on-year, the fleet and lease sector recorded a significant £939 (12.0%) uplift.  

Demand remains high at the budget end of the marketplace and average part-exchange values remained above £3,500 for the fourth successive month.

Values improved only marginally (by just £10) to £3,566 while CAP performance fell to 95.8%. 

However, year-on-year values were ahead by £663 – a significant 22.8% uplift compared to March 2012. 

Average values climbed in the nearly-new sector by £2,476 to £21,075, while performance against CAP Clean improved by half a point to 100.6%.

Nearly-new values will always be affected by changing model mix in this low volume sector and these figures reflect a number of special high value sales staged by BCA during March.

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