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Car dealers making more money in the used car deal, says Manheim

At auctions dealers are paying less for ex-fleet cars yet making more on their part-exchanges, according to information from Manheim, leaving them more margin in the used car sale since the recession.

The average proportion of new price earned by car dealer part-exchanges has risen from 16% in January 2008 to 20% in February 2015. Yet with ex-fleet cars, acquired by dealers for stock, the average proportion of new price paid has declined from 38% to 36% over the same period.

In both instances, the average age of vehicles is 10 months higher. Fleet cars have 13,000 more miles recorded, while part-exchanges have increased mileage by 3,000. Fleet values are £1,000 higher, while part-exchange prices are £1,400 higher.

“In terms of what you’re getting for that price, you’re paying an awful lot more for an older car with higher mileage,” said Craig Mailey, strategic planning director at Cox Automotive International, Manheim’s parent.

Mailey warned that 2015’s used car market is expected to be weaker than that of previous years. After six years of rising prices for wholesale cars, values may come under pressure. 

Manheim’s tracking of first time conversions at auctions during quarter one, the UK’s strongest quarter, shows Q1 2015 demand has not been as strong as Q1 in the past three years.

“It says we really need to be careful because at this time of the year as we near the Easter period that’s when that transition happens in the motor trade.”

“We’re not concerned at the minute, because we think the volume will be okay and this year will carry on as previous years, but certainly we’re not expecting some massive price rises this year.”

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