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Used car market stable in July, despite new car market decline

Philip Nothard, Cox Automotive’s customer insight and strategy director

Cox Automotive has said the used car market remained stable in July with increased stock availability and online activity.

The company’s Market Tracker report for July shows that while trading for the month started well, there has been a drop-off in consumer demand.

However, both average wholesale prices and volumes experienced an increase of 5% month-on-month (MoM), while average mileage eased-up slightly to 61,463.

Average part-exchange price increased slightly by 0.7% to £3,683 and the average age of vehicles was 82 months, down marginally by 0.1%. The volume of part exchanges recorded by Cox Automotive saw an 8% increase MoM.

Dealer Auction, the trade-to-trade online auction platform, enjoyed its best figures in July, with 8,070 vehicles sold equating to a 6% year-on-year increase on the same month in 2018.

It also saw the overall average price fall MoM, down 6.0% to £4,402 from £4,603.

In terms of stock mix, NextGear Capital recorded a small decline in average holding days (down to 61.8 days) and average mileage marginally down to 59,406 for vehicles bought using its stock funding plan. It also saw the average age of its funded units up from six to seven years.

Diesel decline

July’s figures show diesel values declined by 16.2% year-on-year to an average of £7,643. This is in stark contrast to alternatively fuelled vehicles (AFV) which saw a 27.3% increase YoY to £12,914. Petrol saw a 13.7% increase to £4,680.

Philip Nothard, Cox Automotive customer insight and strategy director, said: “While the wholesale market remains challenging and a tad inconsistent, it is positive to see stock availability improving.

“We are also seeing some dealers moving to grade 3 product. The significant hike in AFV prices demonstrates that there is a growing demand from consumers and a real appetite to evolve their stock profiles among dealers.”

Dealer sentiment for July

Cox Automotive said stock has started to return to the wholesale sector, with 43% of dealers citing a decline in consumer demand.

The company surveys around120 industry key leaders, middle/senior management, executive and influencers each month from across the sector including independent, franchise and supermarkets.

Margins are holding up with 18% reporting improved used car margins YoY, 43% said used car footfall was about the same and 61% believe economic conditions will hold steady in the coming months, despite the threat of a no deal Brexit on October 31.

The company’s monthly dealer survey data also shows that 36% are reporting an increase in overage used cars and 40% have seen an increase in days in stock.

Nothard said supply and taxation deals influenced demand for aging stock and consignment new cars. The data shows 83% of dealers reporting a decline in overage used cars and 68% reported a decline for consignment stock.

Nothard said: “Retailers and manufacturers are preparing for the introduction of Real Driving Emissions (RDE) testing on September 1.

“As a result, we have seen increased levels of tactical registrations by various manufacturers.

“Retailers are also taking advantage of potential incentives offered by the manufacturers.

“From a used car perspective, increased levels of pre-registration product entering the sector will create additional much-needed volumes in the wholesale market. We also anticipate increased fleet disposals, as fleet operators replenish stock feeds.

“Although we could experience unseasonal registration throughout August and September, considering the current headwinds facing the sector, performance and activity remain reasonably healthy.”

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