Used car market: November continues the trend

Overall average values actually increased in November, says BCA in its latest Pulse Report with monthly used car values rising to £4,823 – the highest figure since July. The increase however, is illusory as it reflects a significant shift in the mix with reductions in lower priced dealer part exchange volume resulting in overall increased values.

Year on year values are down £689 and in the month there was a further fall against Guide values as the average performance against CAP Clean dropped by 1.33 points to 89.59%.

With economic conditions remaining difficult and consumer confidence low despite the UK base rate cut of 1½ points early in November, BCA is not expecting any major changes to the prevailing conditions in the short term.

The reality of the market place is more clearly seen within specific market sectors. Within the overall average figure, Fleet & Lease cars fell by £128 against October and Part-Exchange vehicles fell by £56.

Fleet & Lease Sector

Average monthly Fleet & Lease values fell year on year by £918 (14%) to £5,596 in November. CAP performance fell by 4.78 points year on year to 88.94%, which was 1.88 points lower than October. There is as yet no clear evidence of contract extensions with average age and mileage largely unchanged over recent months and compared to last year.

Part-Exchange Sector

With pressures in the new car retail market, fewer part-exchange vehicles have been reaching the wholesale sector. This relative shortage of what is often budget-priced stock has kept values relatively level over recent months.

After October recorded a small fall of £43 in average values for Part-Exchange stock, values fell by a further £56 (2.7%) in November to £1,985. Year on year the decline was £356 (15%). The average performance against CAP Clean was 86.65%.

BCA’s Communications Director Tony Gannon commented “Because demand remains weak, we are not anticipating much change before the end of 2008. In recent years, December has been a period where the volume buyers dominate proceedings and seek to acquire stock in advance of the traditional January price rises. This is often combined with a relative shortage of stock, which stimulates market values. However, based on current trends, there is little to indicate that market values are about to pick-up as they have in previous years. This means in real terms used cars are going to remain more affordable than they have been in many years.”

“The budget end of the market remains very busy, but there is a definite watershed in demand at around £5,000 – which can be seen as the upper limit of affordability when finance is hard to come by for retail buyers. Inventory depreciation remains a critical factor for any organisation holding large volumes of vehicles.“