Conversion rates are expected to increase at the UK’s car auctions during August as the number of used cars entering the market struggles to meet the demand from car dealers.
The National Association of Motor Auctions (NAMA) said that less than 10% of respondents to its monthly remarketing provider survey were expecting conversion rates to fall this month, which it described as “a notable improvement from recent months, where rates have been weaker”.
The trend could apply greater pressure on car retailers who may be searching for used car stock in anticipation of a year-on-year reduction in new car sales and resulting part-exchanges in September.
Head of NAMA, Louise Wallis, said: “More than 50% of NAMA members are expecting conversion rates to increase in August.
“This has been assisted by the volume of vehicles coming though remarketing centres which has meant buyers have had less vehicles to choose from and has in turn increased conversion rates of those vehicles that are available to buy.”
NAMA’s market attitude survey also revealed that remarketers anticipate vehicle values to stay the same this month, with around 68% of respondents predicting petrol values will remain similar to the previous month and just 12% expecting a decline.
However, although over half of respondents believe diesel values will remain steady just under 40% believe they will fall.
This would indicate the continuing inclination from buyers to purchase petrol vehicles to fulfil consumer preference for these vehicles.
Electric Vehicles (EV) values are said to be showing signs of improvement, with 20% excepting them to rise this month compared to just 8% last month, it said, adding: “The increase in EV values is expected to be driven by shortage of supply of new vehicles pushing buyers into the used market.
“Values of hybrid and plug-in hybrid both appear to be stable according to over 80% of respondents.”
NAMA survey respondents said that the average age and mileage of vehicles passing through auction halls and online sales this month looked set to remain steady this month, with almost 70% of respondents indicating the month will see a similar trend to July.
The Euro-6 market is anticipated to remain strong with around 40% of respondents expecting values to increase during August. The continued focus on air quality and growth of Low Emission Zones is expected to keep demand for these vehicles strong.
Wallis said: “The auction market appears to be stable and there has been a reduction in stock coming into remarketing centres which has had a positive impact on both values and conversion rates.
"This trend is expected to continue through August ahead of the plate change at the start of September when volumes will start to increase from dealer part-exchange vehicles.”