Used car values rally in August at BCA
BCA’s latest Pulse report shows that the used car market rallied in August with values rising as supply reduced and professional buyers prepared for the busy autumn period.
Increases in average values were recorded in the Fleet & Lease and Part-Exchange sectors, although average values decreased in the Nearly-New sector – the latter largely as a result of changing model mix over the period.
As a result, the average used car value at BCA recorded a modest increase to £5,905 in August from £5,784 in July. The rise of £121 was equivalent to a 2% increase over the month, while performance against CAP Clean increased by one and a half points to 96.28%.
BCA’s Communications Director Tony Gannon commented “Following a period of softer demand over the peak summer months, the latter part of August saw increasing interest from professional buyers, leading to a welcome improvement in conversion rates and the resultant increase in average values. It is notable that new cars recorded their worst August monthly sales figures for 44 years over the same period and further proof that used cars remain the bedrock of profitability for retail dealers.”
Year on year values remain behind as they have done for several months. In fact, August recorded the largest ‘negative’ variance seen this year with a deficit of £318 against the 2009 figure of £6,223 - the latter figure being the peak of the market last year. In contrast, values remain well ahead compared to two years ago when values reached the then nadir of £4,756 in August 2008 – only October 2008 saw values fall further.
Gannon added “The market is reverting much more to type than we have seen in the previous two years – which really were extraordinary in terms of the fall and subsequent recovery. If the trends continue into September with plenty of demand and reduced supply, prices are likely to remain firm in the short term, at least. However, if this year is seeing a return to the seasonal norms as we firmly believe, then we can expect to see values under more pressure from late September until the Christmas period.”
Looking in a little more detail at the market sectors, fleet values rose by £155 (2.15%) from £7,180 in July to £7,335 in August – still behind year on year, but a welcome improvement. Part-Exchange stock remained relatively flat at £2,579 – recording a small improvement of £38 equivalent to a 1.5% rise. Nearly-new, in contrast, fell from £20,039 to £18,982 – a decrease of £1,057 (- 5.2%).
Fleet & Lease by Sector –July & August 2010
At £5,422, volume fleet & lease values were effectively static in August, (down just £3), halting a three month decline from April when they peaked at £5,835. In contrast, budget fleet/lease car values rose from £3,359 to £3,542, a substantial £183 or 5.4% increase (following a 5.8% increase the previous month). However there is a caveat that numbers are low in this sector and model mix has a disproportionate effect on value. Premium fleet models also increased in value from £10,449 to £10,808 – broadly returning to where they were in June.
Year-on-year comparisons show average fleet & lease values behind by £240 (-3.1%) with CAP performance down by nearly five and half points at 95.8%
Part-Exchange by Sector – July & August 2010
Values may have improved in the Part-Exchange market, but overall values have remained relatively flat over the past year or so, despite CAP percentage performance improving by nearly two points, reaching 92.81% in August. Year on Year values are behind by just £71 or 2.67%.
The Volume sector recorded a small – but nonetheless welcome - percentage increase in August, with a £28 rise equivalent to a 1.6% improvement in average values. Premium values fell back by £48 – just over 1% - while there was a substantial £103 rise in budget P/X car values – from £1,337 to £1,440 – an increase of 7.7%.
Nearly-New by Sector – July & August 2010
Nearly-new values fell from £20,039 to £18,982 – a decrease of £1,057 (- 5.2%). Volume values fell by £258 (2.4%) in August to £10,420, while premium nearly-new cars improved for the second month running, this time by £549 (2.3%) to £24,293. The uplift in Budget nearly-new values was entirely due to model mix in this very slimly populated sector.
