Seasonal pressures see used car market slow in July
BCA’s latest Pulse report shows that demand for older, lower value dealer part-exchange cars improved in July, but the fleet & lease sector has experienced more price pressure. The headline average used car value declined in July, as would typically be expected at the onset of the summer holiday months.
Values across the board fell to £5,633 down from the £5,662 recorded in June – a £29 decrease that was equivalent to 0.5% fall. Year-on-year, July 2011 is £151 (-2.6%) behind the same month in 2010. Sold volumes stalled after several months of steady growth, falling by 5.5% - a reflection of the generally lower levels of activity over the summer months. Performance against CAP Clean improved by around a point to 95.6%.
BCA Communications Director Tony Gannon commented “The summer months are typically a time of slow demand and reduced activity in the retail car markets and this is reflected in the wholesale used car sector. While there are, of course, worrying signs from the economy that will not have helped, it is not unusual for values to fall back in the peak summer months.”
Gannon added “However there are some pressures in the marketplace and conversion rates remain fragile. We expect the market to remain steady during August, but will be looking for activity to increase in the wake of the September plate change.”
Fleet values continued to decline as they have done ever since the market peaked in January – with six consecutive monthly falls now recorded, values are 10.5% lower than at the start of the year. Month-on-month values fell by £71 (1%) to £7,000 in July, while CAP performance improved by over a point to 95.98%. Following the general market sentiment, sold volumes reduced when compared to June. Year-on-year values are behind by £180 or 2.5%.
The part-exchange sector bucked the general market trend, posting a modest increase of £24 (nearly 1%) to £2,672. Year-on-year figures are ahead by £131 (5.1%), the only sector demonstrating value growth compared to 2010. Performance against CAP remained at 91% for the second month running. Reflecting the slower retail market, sold volumes also fell compared to June.
The nearly-new sector saw values fall from £19,578 to £17,897, equivalent to an 8.5% decrease, but model mix will have been largely responsible for the changes in this sector as volumes are so low. Performance against CAP Clean remained steady at 101%.
Gannon concluded “Looking back over the past year, used car values have generally been very stable – particularly in the larger volume sectors of fleet/lease and part-exchange. This underlines the relative strength in depth of the used car market, particularly when considering the difficult economic conditions over the same period.”
