Fleet News

Strong used market won't last, auction house claims

INTENSE debate over the future performance of residual values is gripping the fleet industry, amid predictions that a strong start to the year could be short-lived. Manheim Auctions is predicting that prices could fall back in March and April and that fleets may have just weeks to make the most of the current high demand for used cars.

Andrew Shepherd, Manheim Auctions' senior group auctioneer said: 'My message to all vendors is to keep pushing their volumes through the auction halls, keep their reserve prices to sensible levels, give buyers the incentive to bid and sit back and watch their stock sell. But bear in mind they only have another few weeks of this buoyant market. The market in 2001 is running exactly the same as the first quarter of 2000.'

While the first quarter of last year saw the used market buoyant, the rest of the year saw a collapse in residual values with contract hire firms and fleets alike shouldering losses reaching millions of pounds. However, CAP and Glass's predicted the present buoyancy of the market could be long term, even if a slight decline in prices could be expected. Ramesh Notra, senior economist at CAP Motor Research, said: 'There is a normal seasonal improvement in prices, since residuals tend to be strongest at the start of the year, ahead of the March Y-registration plate change. We expect residual values will weaken this month with the introduction of the Y plate. However, declines are expected to be less marked than last year.'

Adrian Rushmore, Glass's chief car editor said: 'Should the extra supply of used vehicles drive residual values down, we estimate that retail demand for used cars will soften the blow.' Tom Madden, British Car Auctions' director of customer affairs said: 'Providing the right stock is put before the right buyers in volume, then residuals will be as strong as the market allows.'

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