Used car values fall for second month running
BCA’s latest Pulse report shows that average used car values have decreased for the second month running – the first time there have been consecutive monthly falls since August of last year. The overall average value for cars sold in October was £6,021 – a fall of nearly £200 compared to September – but still the fourth highest monthly figure recorded in over two years.
Unsurprisingly, values remain well ahead year-on-year by £1,278 (27%), highlighting just how strongly values have recovered in 2009.
While last month’s fall was largely due to a seasonal change in model mix at BCA as fewer high-value nearly-new cars and greater numbers of lower-value part-exchange cars were sold, market dynamics have driven the fall in October.
In fact, average values have fallen in two main product sectors – Fleet & Lease values fell by £234 to £7,616 (down 3%), while Part-Exchange values decreased from £2,672 to £2,585 – a fall of £88 or 3.3%. Nearly-New values increased by £1,060, although there was a shift in model mix towards higher value premium models that will have had an effect.
Performance against CAP fell quite sharply across the board from 99.87% of Clean values for all stock to 95.48%.
BCA’s Sales Director Mark Hankey commented “There has been a change in market dynamics over the past six or seven weeks. Volumes have increased and the net effect is that we have moved from an above CAP Clean market to a below CAP Clean position in a few short weeks. Average performance has moved from just over 100% in August to 95% in October – which is the lowest it has been all year. Polarised demand has seen buyers supporting those sellers who are presenting their stock well and pricing it in line with this current market sentiment.”
He added “It is far more beneficial to focus on the real time cash values that the market is prepared to pay – which continue to be substantially higher than earlier this year – than any guide price equivalent. Some sellers are turning down bids in the current market that are significantly higher than they were accepting just a few weeks ago. As a result we are advising vendors to closely monitor the volume and ageing profile of their unsold stock.”
Hankey added “When taken in the context of the exceptionally strong prices we have recorded this year, it is not surprising that the combination of rising volumes and the typical seasonal slowdown in advance of Christmas have cooled prices somewhat.”
Fleet & Lease Sector - October
Average Fleet & Lease values fell by £234 to £7,616 from £7,850 in September. The 3% fall was the first recorded since December 2008. Performance against CAP Clean fell for the third consecutive month, from just under 100% to 95.44%. It is the biggest fall since May (following the Guide adjustment) and is at its lowest point since last December.
Even so, year-on-year values are well-ahead by £1,749, equivalent to a 30.5% uplift over the 12 month period.
Looking at fleet and lease product by sector, the fall in value was distributed fairly evenly between budget cars (down 2.6%), volume models (down 3.2%) and premium stock (down 2.8%).
Part-Exchange Sector – October
Values decreased in the part-exchange sector for the first time since last November, (when P/X values reached their absolute nadir). Values fell by £88 from £2,672 to £2,585 – a fall of 3.3%.
Dealer P/X stock effectively suffered a triple whammy in October – a slightly softer marketplace and greater numbers of P/X cars reaching the market combined with increasing volumes from the fleet & lease sector. As the dearth of fleet cars had driven demand into the P/X sector, this has effectively dwindled as fleet volumes have increased. Despite all this activity, year-on-year average values are ahead by £545 or 26.7%.
Looking at P/X product by sector, the fall in value was felt most strongly in the premium sector, where values fell by £328 – nearly 7% - to £4,468. Budget and volume car values fell by 5% and 4% respectively.
Nearly-New Sector - October
October brought another seemingly substantial increase in nearly-new values, with the average price breaking the £19,000 barrier for the first time on record to reach £19,160, representing a rise of £1,060 over September. Although the average CAP performance fell by three points, it exceeded 100% of Clean values as it has done all year.
Year-on-year values are now ahead by £5,833, with CAP performance ahead by some four points compared to a year ago.
Much of the increase in Nearly-New values will be accounted for by the shift in model mix towards higher value premium models during October.
