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This year average used car values have surged to record levels and the BCA suggests that next year could bring more success for the used car industry as the availability of retail quality used cars remains limited.
Throughout 2013, average used car values have risen substantially year-on-year from 2012 according the latest Pulse Report from BCA. The Pulse Report underlines the on-going value evolution in the used car market.
The demand has risen for the first time for market fleet and lease stock and values have risen by around 15 per cent in comparison to 2012. Values for dealer-part exchange vehicles have also risen sharply as professional buyers have focussed on older cars with a higher mileage.
Simon Henstock, BCA’s UK Operations Director commented “We have seen an upturn in the supply of dealer part-exchanges at BCA in 2013, reflecting reports that retail sales have been strong. However, supplies of fleet & lease vehicles remain constrained, a consequence of the reduced new car sales to the business sector following the onset of the financial crisis in 2008.”
“While new car volumes have recovered well in 2013, it will be some time before we see those volumes reach the used car sector. As the chart shows, the availability of 3-5 year old cars (blue column) will continue to be depressed at least until 2015, when compared to the volumes available before the recession took hold.”
Henstock added “A year ago, we were saying that used car values could not possibly maintain this upward price trend forever and, while that is no doubt correct, there has been little in 2013 to suggest a sustained fall in values any time soon. Both fleet/lease and dealer P/X values have been running at record levels at BCA in recent months as dealers have competed for stock for their retail forecourts.”
“Looking into 2014, January typically brings an uplift in activity, and this is usually sustained until the Easter period – which often represents a watershed in demand. Whether or not we see the sustained price evolution we have experienced over the past 24 months will largely depend on stock availability and buyer confidence, as price is effectively set by the balance between supply and demand. Making it easy for professional buyers to source and acquire stock is critical, so they can turn retail opportunities into firm sales and the digital arena and efficient logistics both have big roles to play here.”
Moving forward, Henstock believes that continuing economic confidence will be the key factor. He believes that the economy is improving and that employment levels remain high which may tempt more retail buyers into considering changing their current car for a ‘newer’ used vehicle. If this happens then we can expect to see even more competition in the wholesale markets and an inevitable rise in the average values.