Fleet values march on, but September is weaker

Despite ongoing uncertainty in the economy, the latest price data from BCA shows that average prices for used cars continued to rise in the third quarter. However, September was relatively weaker than both 2006 and 2005, and there are concerns that values could come under pressure in the final quarter of 2007.

September rise conceals weakening market

Values for fleet & lease vehicles rose to £7,345 in September, an increase of nearly £400 over August. In comparison, last year values leapt by nearly £1,000 between August and September.

Against CAP Clean, values averaged 98.4% - the highest figure recorded this year, although CAP percentages did not hit the heights they achieved in September 2005 and 2006.

Values in other sectors also reached record levels in September. Part-exchange values peaked at £3,280 – a modest rise of £40 over August, but still the highest monthly value on record.

BCA’s Communications Director Tony Gannon commented “While third quarter values have been strong this year, they could be concealing a weakening market. September has not provided the step up it did in 2006, and the signs are that values will be under pressure in October and potentially to the end of the year.”

He added “In September last year, fleet values reached record levels at £7,190 and the leap from August ‘06 to September ‘06 was nearly £1,000. This year, record values have again been achieved but the increase over August was less than £400.”

He added “It could be argued that either August was weak last year and strong this, or that September was exceptional in 2006 and somewhat less so this year. As September 2006 recorded average CAP values in excess of 100% of Clean and this year is off the pace, the latter is likely to be a more accurate assumption.”

Quarter 3 data

Average Fleet & Lease values across Quarter 3 as a whole were down against Quarter 2 from £7,130 to £7,094. This repeats the pattern established in previous years. Year on year, however, average quarterly values were ahead by £483.

Average quarterly performance against CAP Clean by fleet & lease cars increased by 1.4 points to 97.5% - again the highest figure this year, but behind the same period in 2006, where an average of 98.1% was recorded. This continues the pattern seen every year going back to 2004 when the 3rd Quarter and September in particular have been the high points in the annual cycle. Average mileage fell slightly against last quarter, while average age at remarketing rose by approximately one week to 38¼ months.

While fleet and lease values were falling, other sectors performed relatively better. Average part-exchange values rose to £3,257 – a new quarterly record value – and nearly £500 ahead of the same Quarter last year (£2,790). Nearly-new values also reached record levels, rising by £1,100 to £16,209, against the previous quarter of £15,109. Year on year, nearly-new values are around £1,000 ahead of 2006.

The BCA Index, which aggregates the values across the three sectors weighted to volume, improved again to 119 points, the highest point recorded to date in the four years it has covered.

Gannon concluded “What is clear to see is that there has been a notable price evolution across the board as used values by sector are significantly higher in 2007 than they were in 2006. However, we could be about to see conditions tighten somewhat in the final part of the year and sellers should watch the trends very closely to ensure their stock is valued in line with market sentiment.”