A degree of realism has returned to the used car market, with sellers accepting that values are dropping and that they must present cars in the best condition in order to achieve close to forecast residual values.
Auction houses have been warning for months that there are fewer buyers at auction and those who are buying are being much more selective in what they buy.
This has led to an oversupply of used cars and therefore a more dramatic decline in used values than was predicted earlier in the year.
However, de-fleeters who enter their cars with realistic reserves and in the best condition are still achieving healthy sales.
Citroën recently entered 277 ex-hire, lease and management cars aged between 12 months and three years old for auction.
It sold 246 at the BCA open sale – the equivalent to an 89% conversion, which in itself is an impressive achievement in this market.
The sale also generated revenues of over £1.5 million, equivalent to 99% of CAP Clean values, which is well above typical average values being achieved.
Citroën confirmed that this was a typical sale open to franchise and non-franchise dealers.
There were no buyer incentives or ‘sale-or-return’ offers.
“The quality of the vehicles was very good and our product is suited to the current climate,” explained a Citroën spokesman.
Achieving 99% of CAP Clean may be down to the fact that CAP had just published its monthly book, which included revised residual values.
But even so the performance by Citroën was still impressive and runs against the general market trends.
“Citroën is bucking the general trend in the market by using all the tools in the remarketing box – they prepare stock to retail standard and ensure all the relevant paperwork is with the car when it is sold – this helps build buyer confidence, particularly with remote Live Online buyers who do not see the car in the metal,” explained Paul Dunn, BCA account manager.
“If buyers are confident and vehicles are well-prepared and realistically valued then that is a recipe for success whatever the market conditions may be.”
This year has been particularly difficult in the used car market.
Between July last year and July 2008 there was a -14.3% decrease in residual values.
In the same 12 months between July '06 and July '07 there was just a -2.7% decrease.
While the market has been depressed since January it wasn’t until May that there was a significant downturn in values, with average three-year-old values dropping by 2.6%.
“This has continued into June, with the average 4.2% drop in values being the largest single average price movement in one month for several years,” said CAP in its six-month review.
“Volumes of stock in the market have been rising for some time and this will certainly have helped depress values.
"This is further exacerbated by continuing high levels of pre-registrations…aggressive front-end discounting on pre-registered cars is bound to have a cascade effect on earlier vintage values.”
Other factors depressing the market include recent changes in VED legislation and ever-increasing fuel prices.
However, there are some exceptions to the downward trend – and Citroën cars, which are typically smaller and less polluting, will have benefitted from these. The super-mini and city car sectors, for example, have consistently enjoyed the most buoyant residuals.
In its latest monthly analysis Manheim said the value of used fuel-efficient vehicles, like the C1, have remained steady.
“In the fleet sector, the average selling price fell by £83 (-1.5%), with a fall of 1 month in average age and an increase of 2,317 miles in average mileage.
"However, within this, the value of soft roader models fell by £442 (-7.0%) in comparison with May '08, which was a £1,519 (-20.6%) fall in comparison with June '07.
"In contrast, the increase in average selling price for supermini models, up £140 in comparison with May (+4.2%) and £106 in comparison with June '07 (+3.1%) highlights that demand for more fuel efficient vehicles remains steady.”