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Guest opinon: David Scarborough on the instability in the used car market

David Scarborough (pictured), Aston Barclay commercial director

In stark contrast to the belief voiced by the National Association of Motor Auctions to AM, used car market values are not remaining stable and for the first time in many months we are all experiencing more difficult times.

Gone are the high conversion rates that for so long have returned good profits on part-exchange product to all dealers.

The market has shrunk with supply now outweighing demand as many dealers now count the cost of exceptional March registrations and part exchange product pushing into already crammed auction centres, some of which are full of their own inventory following heavy national advertising to buy vehicles.

Seasonally, with Easter, bank holidays and the Spring weather all changing the dynamics, from the minds of buyer and the desirability of different types of models ie 4x4s and convertibles to the significant flood of volume from March registrations, we always experience a downturn in the market.

However, it was believed by many in the industry that the hunger and desire for used stock that was enjoyed for the first few months of the year may for once continue during this time.

This has not been the case.

Like dropping off a cliff edge, the market has followed the pattern of history where we see a decline in demand, prices down (with a few exceptions) and a painful few weeks while sellers come to terms with the change and the books re-align themselves.

It’s fair to say the market dynamics change quicker than the guides reflect and this causes some uncertainty and delay in the process.

So what now?

It could be short lived, a kneejerk reaction to high volumes perhaps and in a few weeks we may see prices and sale rates improve to where they were in February.

But this is unlikely for the foreseeable future as volume typically becomes more available. 

In truth, only those that are pro-active with product valuations and market awareness will win the buyers' attention in auction halls while others chase the market and buyers in a dangerous game of ‘hope’ that one day demand and values will again replicate the past. This is not likely.

Prices will now start to reflect a future characterised by the usual downward trend that has been the used car market for as long as time.



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