BCA's latest Pulse report shows that average values rose in January following the disruption caused by the Arctic conditions and shorter trading period in December.
Both the fleet & lease and part-exchange sectors recorded notable value improvements, with PX values reaching a record level.
Fleet values increased sharply by £504 (6.9%) to £7,739, to reach the highest monthly average value since April 2010 and completely reversing the steep average value losses experienced in October and November of last year. Year-on-year values are ahead by £480, equivalent to a 6.6% rise, with fleet cars averaging 98.65% of CAP Clean in January, a rise of two points over the December figure.
There was also significant value growth in the part-exchange sector, which climbed for the third month running even as sold volumes increased by some 83% over the month. Values rose by £132 (4.8%) to £2,837 in January to reach the highest value on record for P/X cars, improving on the previous high point of £2,762 recorded in September 2009. Performance against CAP improved by two points to 95.5%.
The nearly-new sector saw values fall sharply, however, as over £4,000 came off the average value as sold volumes almost doubled between December and January. Average values fell from £21,691 to £17,619, with CAP performance returning to 102% having risen to nearly 107% in December.
The fall in nearly-new values, combined with the much changed model mix over the month had the net effect of slowing the growth in the overall average value. Despite increases of nearly 7% and 5% for fleet and PX vehicles, the average used car value at BCA in January rose by just £69 (1.1%) to £5,974. Sold volumes increased significantly in January compared to December, rising by 72% over the month and by over 10%, year-on-year.
Performance against CAP Clean improved by over a point to 98.6% from 97.4% the previous month - it's the third consecutive monthly rise in CAP performance. Year-on-year, values are just £35 ahead of January 2010, but over £800 ahead of January 2009.
BCA's communications director Tony Gannon commented "It is no real surprise to see values strengthen in January as the markets generally enjoy an uplift in activity following the extended Christmas break. This is typically sustained until the Easter period - which usually represents a watershed in demand."
However, as Gannon warned, several factors are likely to combine to affect the market over the next 12 weeks or so. "While supply should remain constrained throughout February and the early weeks of March, it is likely that volumes will start to rise in late March following the plate change as de-fleeted and dealer part-exchange vehicles begin to hit the market."
"Easter week itself is late in April and runs into the Royal Wedding - effectively disrupting a full week of trading. This is a particularly important consideration for volume sellers who should be planning their strategies now for that period, which could see demand slowing, just when volumes are rising."
Gannon added "Anecdotally the retail motor trade has enjoyed a much better January, following a poor December when motorists simply could not get out to buy. Part-exchange sold volumes actually increased by over 88% in the month, a reflection of both a good January and a very lean December. And with new car sales remaining under pressure - down 11.5% to 128,811 last month compared with January 2010 - used car activity remains the best profit opportunity for most dealers."
He concluded "At the budget end of the market, there is likely to be continued demand from motorists who simply cannot afford to buy a more expensive car, but still need personal transport and need it quickly, because their current vehicle has become too expensive to repair or maintain."