Used car values fell in November for the third month running as the market fell back into its seasonal pattern.

Figures from BCA’s Pulse monthly market analysis show a 2% fall in average values, following a 3.2% drop in October and a less than 1% fall in September.

The £118 drop means the average car now sells for £5,903.

Over at Manheim, average values stabilised with a 0.06% drop – just £4 down to £7,169.
The pattern is one of normality returning to the remarketing sector, finishing off a year which saw huge gains as values climbed from the abyss at the end of 2008.

BCA’s communications director Tony Gannon said: “With this slowdown, the market appears to be resuming a more typical pattern of activity.

"In previous years, September was often a peak in the annual price cycle, with values falling slightly in the months of October and November and that is exactly was has happened this year.”

Mike Pilkington, managing director of Manheim Auctions and Remarketing, added: “Values stabilised in November but are still nearly £1,900 higher than they were 12 months ago

"The fleet sector suffered value falls of less than the seasonal norm and the manufacturer sector performed significantly better than predicted.

“These results confirm the continued underlying strength in the market despite falling retail demand at this time of the year; indeed, wholesale purchasing activity was vigorous in the month from some dealers as they anticipate rising values and stock shortages in the new year.”

Fredrik Skantze, co-founder of Autoquake, added: “Prices kept on adjusting downwards in November. Retail demand has tailed off and, as a result, the downward movement in price was still slightly more than the norm for the season. Average values fell by 4.8% to £7,386.”

Theo Kortland, business development director at grs, agreed: “Residuals have been on something of a rollercoaster ride over the past 18 months, but we can see that prices are stabilising and reaching just about where we would have expected them to be at this time.”

Values of ex-fleet and lease stock going through BCA fell by nearly 6% to an average of £7,159 in November – down on September’s high of £7,850 but still massively ahead of the same month last year when average values were just £5,596.

At Manheim, fleet stock fell by 3.2% to £6,206.

But the over-riding feeling in the market is one of caution among buyers. CAP’s Black Book editorial, which reported a 4.2% fall in average used values last month, states that “the market continues to wilt as retail buyers stay away and nervousness and caution prevail”.

It added: “However, now that prices have fallen back significantly there has been some increase in trade purchase activity.

“A significant number of speculative trade buyers have been waiting in the wings, keeping a close eye on values, and are poised to move in during December in preparation for the New Year retail spend.”

Also holding back are some leasing companies, according to David Scarborough, national sales director at Aston Barclay.

He added: “It appears some leasing companies are holding back some high value and difficult-to-sell models to January in the hope of an improvement in residuals.

“This means high levels of stock are likely to enter the market in January.”

Kortland at grs predicts supply will be much lower in 2010. He added: “We can expect to see the market continue to experience pressures in the supply of high quality used vehicles.

“Combine this with the change in profile of vehicles (age and mileage creeping upwards) and we can expect prices to be strong moving into 2010.”

Sector-by-sector analysis of used car market values

City cars

Overall values for cars in this sector at three years/30,000 miles is down 4.4%, although there are significant variations in model performance.

Values of Smart models have dropped by around 8%, while Suzuki’s Alto has found its level with prices rising by 2.2%.

This sector has been most prone to the impact of scrappage, especially among values of one-year/10,000-mile examples.

At this level, values are down by 4.1%. Once scrappage ends, and if fuel prices continue to increase, it is a fair bet that this area will return from the doldrums at some point.

MPVs

There is plenty of stock to choose from at almost every auction, which has seen significant price falls.

Citroën’s Xsara Picasso has fallen by 7.8% at three years and 60,000 miles, while the Vauxhall Zafira is down 7%.

As a result, only the very best cars have been attracting interest, and any models requiring work have been shunned if the reserve price has not been set at a realistic level.

Lower-medium cars

This sector has held up well, with relatively small price movements. However, this month values have fallen by an average of 5.3% at three years/60,000 miles.

This is mainly due to price movements of around 2% more for certain volume models due an increase in unsold cars.

Examples include the Citroën C4, Ford Focus, Peugeot 307, Renault Megane and Vauxhall Astra, which have all seen prices move back by around 6%.

Small executive cars

An abundance of choice has pushed values back by 3.7% in November, although BMW’s 3 Series has fared worse with a fall of 5.9% at three years and 60,000 miles.

Vehicles in this sector have seen far more scrutiny from buyers, with plenty of questions asked to auctioneers.

Source: CAP Black Book