Values soar for fleet vehicles

BCA Pulse Report for Quarter 1 2007 shows record levels for sales of fleet vehicles suggesting sustained consumer confidence in the retail sector.

According to the latest Pulse Report issued by leading vehicle remarketing company, BCA (British Car Auctions), values for Fleet and Lease vehicles rose to new heights in Quarter 1 2007, surpassing the record levels recorded in the final quarter of 2006. These fleet & lease cars, generally around 3 years old with 60,000 miles on the clock, are the ‘stock in trade’ for the retail motor sector and the high values being achieved suggest sustained confidence in the consumer car buying market.

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 September 2006, comfortably breaking the £7,000 barrier and rising by £348 (5.3%) against the previous quarter.

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.

“Economic uncertainty, stimulated by rising interest rates and high inflation might have been expected to dampen consumer buying of big-ticket items, but this does not seem to have been 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.”

The rise was seen in all sectors apart from MPVs where values remained static. Interestingly the average values for petrol and diesel continue to converge, although diesels are remarketed at a much higher average mileage.

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.

Average mileage fell for the first time in five consecutive quarters, and now sits some 2,000 miles lower than it was in the last quarter.

Fleet & Lease Rolling Review
In review, the first quarter performance in 2007 looks even stronger. Price performance in January was strong and, while February flagged a little, all three months outperformed the same months the previous year. March’s assault on the record value achieved in September 06 came very close indeed.

The first quarter was £338 ahead of the annual average price of £6,575 achieved for a fleet/lease car in 2006, suggesting we will see more value growth in 2007 if trends remain the same. Interestingly, the first quarter 2006 outperformed the average price achieved in the previous year by a similar amount (£303 ahead).

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 petrol and diesel were negligible in Quarter 1, 07.

Fleet & Lease Sector by body-shape

As average values for fleet/lease cars have risen, that rise has been split fairly equally between the various body-shapes. All sectors saw a rise in value since the turn of the year, except MPVs, which fell by £5. The biggest rise was seen in Roadsters, which rose in value by over £1,000 – volumes are small in this sector however and model mix at BCA will have an effect.