Values of used fleet cars are set to plummet in the wake of the best month for new car sales in two years.
As official registrations reached 397,383 in March - more than 83,000 up on last year – Glass’s warned that bumper showroom business could slash secondhand values by up to five per cent.
“An increase of almost 30% in fleet and business registrations means significant numbers of three to five year old cars will be added to existing used stock and this will have an erosive effect on prices.
“Without the prospect of trade demand increasing to take account of these additional cars, prices will drop by one per cent in the second half of this month and I’d expect them to fall by three or four per cent in May,” said spokesman Adrian Rushmore.
“After rising steadily during the first quarter, used car values are now at the tipping point. We shouldn’t say they are going to fall into the abyss, but they have reached their peak and May will be really testing.
“Right now dealers are doing reasonably well and replenishing stock, but we wonder what appetite they have for extra cars in a market that will decline.
“Another factor is the general election. It will disrupt the used car market – there was a seven per cent fall during the 2005 election - and there is so much uncertainty this time around that we expect a market hold-off lasting four weeks,” he told Fleet News.
Manheim remarketing managing director Mike Pilkington said: “We are not anticipating any major impact on the market as a result of the election, but we do expect values to fall in the second quarter. After the effects of recession, we seem to be going back to seasonal trends”
However, BCA communications director Tony Gannon said he expected prices to remain firm as competition remained high for best retail-quality vehicles. “Recent weeks have seen some exceptional values recorded on individual vehicles and this is likely to remain a feature of the market.
“In the longer term, the lack of new fleet registrations in 2008 and 2009 will have a dramatic effect on the used supply between 2012 and 2014 and this suggests values are likely to remain firm.”
By Maurice Glover
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