Used car values fall in second quarter of 2008

Used car values tumbled in the second quarter of 2008 with the BCA Index falling by nine points – the biggest fall recorded in 3½ years.

BCA’s report shows overall Used Car values fell to £5,332 in Quarter 2 2008 – a fall of £390 compared to the last quarter figure of £5,722. As a result the BCA Index also fell and is now equivalent to 111 points, down from its highpoint of 120 last quarter. Despite this, year-on-year, Q208 is two points ahead of Q207, when values averaged £5,218.

Specific data for June also shows that average used car values had their most difficult month to date, with all sectors falling compared to May’s figures. Values in the ‘bread & butter’ sectors of fleet & lease and part-exchange actually fell by over 3% and nearly 5% respectively. Average performance against CAP Clean also continued to fall in all sectors.

Year-on-year data suggests that values have now stalled with little prospect for improvement in the next two quarters.

BCA Communications Director Tony Gannon commented “It is no surprise to see values under pressure in Quarter 2 – we have seen average prices fall in the same period in previous years, although not as far or as fast. What is more important now is seeing if the market will bounce back in quarter three as it has in previous years. This makes next quarter’s Index figure critical for industry watchers hoping to predict the medium to long-term prospects for used car values – and by inference – used car demand.”

Gannon continued “June was a particularly tough month and we expect to report more of the same for July. Despite this, the demand is still there for good quality product if it is valued in line with market sentiment.”

BCA’s June figures show that average used car values fell after staging a small recovery the previous month. Across the board, June averaged £5,126, down by £336 from May values on stock that was of a similar age and mileage profile.

Performance against guide values actually rose despite CAP valuing the same basket of stock £443 higher on average, which resulted in the all-sector CAP percentage rising from 90.3% in May to 92.0% in June (up by 1.7 points).

Average used values for fleet & lease and part-exchange cars both fell by over £200 in June, while nearly-new values fell significantly after climbing in May.

Fleet & Lease sector

Average values for fleet & lease used cars again fell quite sharply from £6,428 in May to £6,189 in June, a drop of £239 in a month with similar age and mileage profiles. The average decrease was equivalent to -3.7%, on the back of a 3.2% fall the previous month. CAP valued the same stock at £6,688 a fall of £218 over last month and equivalent to –3.1%. As a result, the percentage achieved against CAP Clean by fleet and lease stock fell for the third month running from 93.1% to 92.5%.

Auction values for Volume fleet & lease product continued to fall and averaged £4,501 in June, compared to £4,630 in May, while CAP values fell by just £65, resulting in a further fall of 1.5 points against Clean values. Premium fleet product fell in value by a further £324 in June to £9,449, following a fall of £484 the previous month. Corresponding CAP values on the same basket of cars fell by £222, resulting in CAP performance falling by over a point to 93.6%.

Part-Exchange Sector

Average part-exchange values fell by £115 (4.9%) to £2,231, the fourth consecutive monthly fall. Average values are now over £200 – around 8% - behind those recorded in January. CAP values on the same stock fell by £100 from £2,517, while the CAP percentage increased marginally to 85.6% from 85.2%.

Average values for Volume part-exchange cars recorded a small fall from £1,687 to £1,655 with virtually unchanged mileage and age parameters. The CAP percentage fell by 1.5 points. Premium part-exchange cars fell in value by £334 month-on-month to £3,870, with performance against CAP Clean falling from 89.4% to 87.7%.

Nearly-New

Nearly-new values fell by nearly £3,000 to £14,192 in June compared to May, with CAP percentage performance falling by 1.75% to 96.9%. Both volume and premium model values held reasonably well, although budget values fell.