Greater stability in used car market

June’s edition of Black Book, the independent benchmark guide to used car trade values, reveals a very similar picture to May with the largest vehicles performing more strongly than the smallest.

Despite dealer reports of reductions in showroom traffic and retail used car sales, demand for good quality stock remains high. CAP’s research suggests that the current strength of trade values is a result of ongoing shortages of stock in the marketplace ensuring a better balance of supply and demand than the used car market has often historically seen.

Comparing today’s used car market with seasonal ‘norms’ established in previous years, the picture is even brighter. This is a time of year that historically has seen weakening trade values but that trend is currently overcome by several factors.

There is still some ‘correcting’ of last year’s unprecedented downturn taking place, with many heavy 4x4s and large executive models which saw up to 50% wiped off their value last year now enjoying renewed and sustained demand. Stock shortages are a direct result of dramatically reduced car production leading to fewer registrations in the new car sector and less pressure on dealers to self-register cars which would normally find their way quickly into the used market.

Black Book is also finding evidence that the scrappage scheme is diverting customers away from smaller late plate cars - as CAP originally predicted - some of which are therefore not performing as strongly as the year goes on. However, Black Book emphasises that small car value performance at present is more in keeping with seasonal norms and that it is larger vehicles which are bucking the usual trend.

Black Book’s Mark Bulmer said: “On average, used car values are generally stable at the moment. Looking ahead to the coming weeks and months there are no signs of significant volume returning anytime soon. With most car buying activity currently focused on the used sector we therefore anticipate a similar picture over the next few months.”