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New car incentives are not impacting nearly-new car values, says CAP

Demand for used cars in the trade market remained unusually robust during September, with some values increasing – a noteworthy phenomenon for this time of year.

And, despite fears that unprecedented retail incentives on new cars could lead to pressure on nearly-new values, little or no real evidence of such an impact has surfaced so far.

Black Book Live, the real-time car valuation trending tool published by CAP Automotive, reports that many dealers are also reluctantly buying cars they would usually overlook rather than risk offering insufficient choice on the forecourt.

CAP has also identified a trend toward dealers receiving more poor quality part-exchanges thanks to unprecedented retail incentives on new cars tempting less wealthy motorists, with low value vehicles, into a new car purchase.

But such is the strength of current retail demand for used cars, Black Book Live also notes that many dealers are often offering older part-exchange vehicles than they would usually attempt to retail, before sending them to auction.

Derren Martin, senior editor of Black Book Live, said: “Daily monitoring and reporting of market prices throughout September revealed values generally remaining firm or even increasing slightly through the month. It has been possible to see a reversing of the small downward movements the market saw in August.

“All of this is the result of low volume in the market coupled with strong demand. Notably there has also been little impact on late plate cars from the now seemingly normal strong new car incentives on offer."

Martin said CAP is seeing a steady footfall a dealrships and a scarcity of good quality stock to replace cars that are sold.

A number of larger franchise groups have had a particularly strong last two months, with not enough respectable part exchange offerings in return.

He said: “We are hearing reports from some dealers that less than a third of cars received in part-exchange are of a suitable quality to retail – a consequence of strong new car offers encouraging those with older, lower value cars to consider a new car purchase.

“Franchise dealers have certainly been glad to pick off the good quality part exchanges for their forecourts, especially while values have been so stable or may even have increased after 30 days on retail. Because overall used stock levels remain relatively low, even some of the less desirable swapped cars have been seen as worth a few days on the used car pitch, before being sent to the auction."

CAP is expecting to see supply increase as part exchanges continue to reach market and is not expecting a severe impact on values.

Martin said: "Our expectations are therefore of nothing more than small downward movements in value, for trade cars, which will largely negate the slight increases we reported in Black Book Live early in September.”

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