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Used car trade values slip as volume is set to keep growing - CAP

Values in the used car trade market are now slipping and underperformed in September compared with the same month last year, according to CAP Automotive.

Ongoing strong demand from retail used car buyers has helped to prevent the worst downward pressure from a rise in supply that still has some way to go, says CAP.

Volumes of cars in stock at auctions are reported by CAP as well in excess of this time last year and only sale conversion rates of around 76% have been preventing values from falling more rapidly.

The analysis comes in the latest market commentary from CAP’s Black Book Live, the real-time trade car price trending and benchmarking tool.

Demand in the retail and trade markets has been strong throughout the summer and CAP’s observers were surprised by the level of interest in sourcing used car stock at auction from franchise dealers in particular, during September.

Generally, franchise dealers tend to be focused on retailing part-exchanges taken during a new registration month, rather than seeking stock in the open market.

However, there were signs of demand slowing in the final days of September, which CAP says may herald further softening in trade values.

Black Book Live senior editor Derren Martin, said: “Our editors attending auctions have been consistently reporting problems finding a parking space and that is always a sign that supply and demand are high.  And when you also take into account the increased popularity of bidding on-line,  demand has certainly been strong.

“This has certainly been particularly welcome because our analysis of supply shows an increase of around ten per cent on last year.

“In general, trade values in Black Book Live have dropped this month, but only by a small percentage.  In most years this would be considered a normal market dynamic but last year the September change was a small upward movement in our reported values.

“Caution is now advisable because we still await the main influx of used cars generated by recent retail sales and fleets swapping into a 64 plate.

“Nonetheless, the retail scene still looks good for the time of year with franchise dealer footfall a little higher than at this point a year ago.

“We now expect volumes of used cars to increase over the coming weeks and the key to trade price patterns will be retail demand.  There is no sign of that dropping away at this moment but if it does, the balance will inevitably sway toward more rapidly reducing values.”



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Comments

  • sbdavid - 03/10/2014 21:20

    That reduces the demand for used cars can be due to the fact that people prefer and have opportunities for new car. Which is better in terms of the people. And perhaps this reduction is temporary. Check here 5markets.com

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