The value of ex-company cars at auction has hit a new high, according to data from Manheim’s latest monthly Market Analysis, which confirms that the average value of de-fleeted vehicles in October peaked at £6,981. Rising by an average of £185 compared to wholesale prices achieved in September, the value of ex-lease and contract hire cars has now reached its highest level since the Manheim Market Analysis began in 2007.
During the month of October, the figures from Manheim also show that the average age of ex-fleet cars fell from 51 to 49 months, while average mileages reduced from 61,119 to 58,752. Clearly, such reductions in the age and mileage of ex-lease vehicles may have had an impact on prices achieved in the wholesale market.
Manheim’s latest industry data highlights the long-term shortage of good quality, low mileage vehicles at auction, which continue to be sought out by dealers looking to fill their forecourts with attractive marques. When compared to the original new price of vehicles, October saw the average ex-fleet car achieve a 35 per cent rate, compared to 32 per cent a year ago. This strong price performance is another indication of a market that is still relatively weak on the supply side of the equation.
Mike Pilkington, chief strategy officer at Manheim, commented: “We’re clearly seeing the economic theory of ‘supply and demand’ in practice here as ex-fleet vehicle prices continue to rise and rise. While the headline figure of £6,891 has no doubt been bolstered by a reduction in age and mileage of cars coming to auction, the big picture is still the same; we are simply still not yet seeing enough good quality, defleeted cars in the wholesale market to meet demand. Predicting future market trends is always difficult, but you have to ask how long can the market sustain such strong values?”
Looking at the performance of the key vehicle segments in more detail, October saw small hatchbacks and medium/large family cars – which account for 65 per cent of Manheim’s stock at auction – increase markedly. While small hatchbacks increased in value by £91 in October, medium family cars appreciated by £224 and large family cars by an impressive £276. Superminis, coupes and 4x4s all continue to realise good residual values, achieving over 40 per cent of their original retail price respectively.
Pilkington concludes: “Typically, we would expect to see selling prices of ex-fleet cars soften slightly in October, but today’s market is clearly bucking this trend. Fleet managers need to be mindful of the fact that we are living in unusual times and they should not be tempted to base future residual values on current vehicle performance at auction.”