Values fall as volumes increase

The latest price data from BCA shows that values have started to slow in May, following a bullish performance in the first four months of the year.

After April established a new monthly record value for Fleet/Lease cars, May saw values dipping. Fleet/Lease values fell by over £300 to £6,986, and Part-Exchange values experienced a more modest drop of £24 against April. Nearly-new values tumbled by over £750 against the previous month, from £14,148 to £13,384.

BCA’s Communications Director, Tony Gannon commented “Price performance was exceptional earlier in the year, but the combination of rising volumes and a more uncertain economic outlook is taking its toll. Buyers are being much more choosy in the post-Easter period, and the competition for the best ‘ready-to-retail’ cars is keeping values at almost artificially high levels. What it conceals, of course, is the rising numbers of unsold cars, where over-optimistic reserve prices have put them out of the reach of buyers.”

Gannon added “And there is no time for complacency. The months of June through to August are traditionally the weakest in terms of price performance, so vendors should keep close to the market and ensure their vehicles are valued in line with current sentiment.”

Fleet/Lease
In April 2007, values for the nominal three-year-old, 60,000-mile fleet & lease car averaged £7,299 – a new monthly record value. Values in April comfortably broke the £7,000 barrier for the second month running and even topped the exceptional values recorded last September.

Values cooled in May, falling £313 (4.2%) to £6,986. Average mileage rose by over 1,000 against April while age remained relatively static. CAP performance against Clean fell by 1.6 points.

Fleet/Lease market 2007 YTD

The April 2007 fleet/lease price performance was certainly not typical of the month. April traditionally sees values starting to cool, particularly after Easter and this pattern was seen in each of the last three years. This year, however, average values pushed on and increased in April. Year-on-year, April 2007 is £611 ahead – equivalent to a 9%-plus growth in value.

While May ‘07 values fell back compared to April, they remain nearly £350 ahead year-on-year. With increasing volumes in the marketplace, the expectation would be to see further falls in average values in the short-term, possibly until September.

Fleet/Lease Cars at Auction

As highlighted last quarter, the price premium that diesel enjoys over petrol in the fleet/lease sector is eroding, even accepting that the mileage figures remain well apart. While diesel values were roughly 5% ahead of petrol throughout 2006, that differential has been narrowing in recent months.

In April, 2007 average Diesel values fell by £35 to £7,138 (still the second highest diesel value on record). However, petrol values surged ahead again to a new record value of £7,542. This represented a rise of nearly £400 over March and is the first time since Pulse began reporting that petrol values have exceeded diesel values.

A more familiar picture was seen in May however, with diesel values again in the ascendancy – but only by £57, equivalent to less than 1%.

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.

Part Exchange

Part-Exchange values fell in both April and May, from the record value seen in March. Despite this, values remain above the £3,000 benchmark and have done so all year – well ahead of average prices achieved in 2006 and again suggesting there could be some downward pressure to come on values in this sector.

Part-Exchange market

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. It is notable, however, that P/X diesel values crept above £5,000 for the first time in April, and remained above that benchmark in May.