Economic slowdown being felt in car auctions

Manheim’s all-new monthly Market Analysis report shows that after a relatively strong first quarter of 2008, the UK wholesale used car market has certainly started to slow down mid- way through the second quarter.

Average used car wholesale values in May 2008 were £6,768 which is 4% below the weighted average values in the period January to April 2008. The report says that the changing conditions are clearly reflective of the broader weakening economic climate which is now impacting on retail sales, with a direct knock-on effect through to the performance of the wholesale market. As the used car market has hardened, auction conversion rates have fallen by between 4% and 9% depending on the sector and this is reflected in auction sales volumes being down by an overall 12% in the month against April. However, it does suggest that although stocks have risen in line with the downturn, they are still at manageable levels.

Commenting on May’s report, Mike Pilkington, Managing Director, Manheim Auctions & Remarketing said: “There is no doubt that trade buyers have become much more selective in their purchasing, aware that there is clearly no shortage of choice. In some cases buyers are only replacing retail forecourt stock to avoid any over-stocking, with others still prepared to invest speculatively in the right vehicles. Whilst the overall effect of the surge in fuel and other motoring-related costs on car purchasing patterns is yet to be properly defined, the general motoring public is certainly using this as an opportunity to fully review their motoring requirements. For example, with diesel prices at the pumps now at least 10% higher than petrol, we are seeing a rising demand from trade buyers for small petrol-engine family vehicles. Conversely, whilst demand for most diesel derivatives is still reasonably strong, there are signs that some of the economic attractions of this fuel derivative are not what they used to be. Not surprisingly, prices for the larger-engine executive car sector – diesel and petrol - are starting to suffer and there is no doubt that the top end 4x4s are under the most severe pressure”.

He went on “Our message to both buyers and sellers is that, despite some of the negative headlines, there is still a good market for sensible trading. However, now is the time to keep very close to what’s going on and the introduction of our new report will hopefully provide its readers with the necessary information to assist them in making the right decisions for their business”.