Fleet News

Marketwatch: Low car sales dip brings residual upturn

THE expected dip in sales of used cars during December was less severe than usual. Trade demand was steady as dealers stocked up for the new year.

These encouraging market conditions resulted in a slight upswing in residual values for three and four- year-old volume cars, CAP Black Book has reported, with 62% of volume cars rising in value, by an average of about 1%.

In its January editorial, Black Book says: ‘It’s positive news, with research indicating almost no change in retail showroom footfall and finance business written during December, compared with the previous month. This tallies with research into dealer sentiment which also remains unchanged on the month before. It is worth noting, however, that this measure of retail market ‘feeling’ reveals an improvement on the same period 12 months ago.

‘Although retail activity was subdued during the end of 2004, dealer stock purchase activity was strong as the sector embraced the need to prepare for the return of customers in the new year.’

CAP believes the leasing sector is comfortable with the current market, despite a slight reduction in conversion rates at auction. Its research has found that disposers are comfortable with their prospects of selling returns in the immediate future. Leasing sector disposals stood at 98.4% of CAP for the period, and that downward movement executive sector is showing signs of levelling out.

According to CAP, the executive sector is being stung by the perception that there are large numbers of executive models which are under-specified, such as early Jaguar X-types which are starting to hit the auction floors in non-SE trim with manual gearboxes and in unpopular colours.

Low specification BMW and Mercedes-Benz models are also struggling, although Sport, Avantgarde and SE versions continue to be popular.

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