The National Association of Motor Auctions (NAMA) has published its monthly market report for October.
The report shows that during October, average values of used cars sold at auction decreased from £4,718 to £4,558, equivalent to a 4% decrease. Values for fleet cars recorded a 6% decrease. Year-on-year, the average price of cars at auction has increased by just 0.1% from £4,554 a year ago to £4,558 this year.
The month-on-month price reduction is somewhat normal for this time of year as auction houses remarket the influx of supply created by the September plate change. Buying from dealers also begins to wane as they prepare for the seasonal downturn in retail sales.
There were signs of even more buying apprehension this month in comparison to previous years. While the economy remains fragile and consumer confidence remains low, consumer buying intentions become increasingly unpredictable. Dealers have not been able to price cars with the intention of achieving customary trading margins because consumers are unable to pay higher prices for the vehicles. This is causing dealers to evaluate the amount of stock they have and consequently overall stock levels are likely to be lower than what might be considered customary for this time of year.
Bob Anderson, NAMA committee member commented, “The mix of cars on offer in October was biased towards lower condition grade vehicles. However, dealers were more focused on acquiring stock that required little remedial attention and could be presented to potential buyers without delay. Higher grade vehicles are currently not in high supply and the likelihood is that this situation will not change for the foreseeable future.”
The fact that average auction prices for cars of all ages are virtually unchanged from last year would appear to be quite encouraging. Unit sales by month from NAMA members recorded year-on-year increases for 8 of the 10 months in 2011. This is not necessarily reflective of a wider supply of cars in the wholesale market, but rather that the auction companies have been successful in winning a larger proportion of the overall market.
Anderson went on to say, “All indications are that the auction market is likely to perform to expectations for the remainder of 2011. We expect to see stock inventories fall steadily between now and the end of the year, with condition grade 4 and 5 cars continuing to be more difficult to sell if unrealistically priced. Trade demand is likely to ease but competition for the best vehicles will remain high.”