Values soar for used vehicles

As predicted in interim data released by BCA, the used vehicle market continues to record strong average values according to the latest Pulse Report issued by BCA today. Pulse data for Quarter 1, 2007 shows that values for both Fleet/Lease and Part-Exchange vehicles have risen from the record levels recorded in the final quarter of last year to new heights.

Values have continued to rise at auction for both Fleet/Lease and Part-Exchange stock. With nearly-new continuing to perform strongly, the three sectors contributed to another record rise for the BCA Index.

In Quarter 1, 2007, values for the three-year-old, 60,000 mile fleet & lease car averaged £6,913 – a new quarterly record value. Values in March approached the extraordinary levels recorded in last September and comfortably broke the £7,000 barrier again. The rise was seen in all sectors bar MPVs were values remained static. Interestingly the average values for petrol and diesel continue to converge, although diesels are remarketed at a much higher average mileage.

Average Part-Exchange values increased for the second quarter running and at £3,182 are at record levels in the first quarter of 2007. Values have pushed through the £3000 barrier for only the third time and the rise of £146 since the turn of the year is equivalent to a 4.8% increase. Year on year, both age and mileage have gone up, and average P/X cars are now nearly 3 months older and 2,000 miles more travelled than they were a year ago. CAP performance has increased by nearly 2 points against last quarter.

Both fleet/lease and P/X values followed similar patterns – price performance in January was strong and, while February flagged a little, March values rallied to record levels. All three months outperformed the same months the previous year.

Heavy demand allied to relatively thin stocks earlier in the year will have helped values to firm. However, by the end of the first quarter volumes had significantly increased which indicates demand is driving values firmly upwards.

BCA’s Communications Director Tony Gannon commented “It is interesting that March recorded the strongest prices, as volumes were beginning to rise. The March plate-change stimulated a lot of interest in retail sales – both new and used – and this will have had a pull-through effect into the wholesale market.”

Gannon added “Countering this, an amount of economic uncertainty stimulated by rising interest rates, high inflation and might have been expected to dampen consumer buying of big-ticket items, but this does not seem to be the case in the first quarter of 2007. In fact market values have remained relatively strong since the ‘price bubble’ in September 2006, when selected high-demand late-year cars were averaging above list.”

Diesel and Petrol Values converging

Looking at the diesel/petrol splits in the fleet market highlights that the five percent price premium diesel enjoyed over petrol for much of last year is eroding, even while acknowledging that diesels average a 20,000 higher mileage at remarketing.

In Quarter 1, 2007 average Diesel values rose by £284 to a record quarterly value of £6,991. The increase followed two consecutive falls in average quarterly value for diesels.

Petrol values, meanwhile, also reached record levels, averaging £6,830 in Q107. This represented a rise of £437 over the previous quarter and is the closest petrol values have come to parity with diesel values in the past 15 months.

Of course, fleet and lease sourced diesels come to the market at a much higher average mileage, and mileage-adjusted values would see a more significant price differential. However, the price trend clearly seems to indicate a narrowing in values between petrol and diesel. Differences in age and CAP Performance between fleet/lease petrol and diesel cars were negligible in Quarter 1, 07.

The diesel/petrol value splits for the P/X sector are much more pronounced than in the fleet/lease sector. The price variance is much greater, remaining on average at around £2,000 or more. This is largely due to petrol cars from PX sources being on average a year older than diesels when sold – fleet/lease petrol cars are generally a month younger than diesels.