Rupert Pontin, head of valuations, Glass's, looks at the impact of the economy on the new and used car market.

2014 has been a very positive year for the new and used car markets, and despite a mild downturn over recent weeks, there is no reason why 2015 can’t be as exciting and profitable, across the wholesale, retail and fleet sectors.

But given the recently and aforementioned quiet spell the industry has been facing recently, what factors look set to impact on the fleet sector over the festive season?

Based on SMMT figures for October, 179,714 vehicles were registered – marking a watershed moment where 2,137,910 vehicles have been registered during 2014 year-to-date. This is the first time volumes have reached more than two million at this point in the year since the downturn in 2007.

Fleet has taken the honours for the largest percentage change in that time recording a 15.2% growth in volume over the same period in 2013, whilst private registrations took second place with a growth figure of 13.6%. Business registrations came in third with growth of 10.3%.
The picture looks really good – but there is an underlying challenge currently facing the fleet market, and that challenge comes from the significant reduction in retail demand we have been observing since mid-October.

The fact that the volume of cars available for retail has increased substantially is quite evident if you look at the numbers of vehicles being advertised for sale today on retail platforms such as Autotrader, Motors and AA Cars.

Retail buyers’ confidence seems to have been dented somewhat by recent concerns over the UK economy, the European economy and the general world picture. We also expect to see an increase in the volume of cars being defleeted over the coming months, and in fact there is already evidence that this is the case.

These trends are giving more choice to the trade buyer. Against this background it will be necessary to review remarketing techniques and optimise routes to market to maximise every opportunity to sell stock.

One outcome of the present situation is very easy to predict: as volumes increase, values will start to go down.