The National Association of Motor Auctions (NAMA) has revealed that during October the average values of used cars sold at auction across the board increased from £4,624 to £4,724, equivalent to a 2.2% increase between September and October.
The increase in prices can be entirely attributed to the large increase of quality cars under two-and-half years old sold at auction during October, reports NAMA.
October registered as the biggest selling month of 2012 so far with an increase of 12.6% when compared with the previous month.
This large increase in sales can be attributed to the increase in stock available at auction. With the trade given a wider choice of vehicles there was a greater propensity for them to buy.
The overall market conditions were considered to be remarkably stable considering that historically October signals a slower pace in activity and deterioration in selling conditions.
However what this report does not show is the overall slowing of the auction market over the last week in October and first week in November.
This is a firm reminder that due to normal seasonal market changes it is it is unlikely that we will see continued increases in values.
The Manufacturer/Rental sector has distorted the overall change in market prices due to the large increase of quality cars under two-and-half years old sold at auction during October.
A more reliable measure of price change can be found in the performance of the Fleet and Dealer Part Exchange sectors down 3% and 2% respectively.
The underlying reduction in prices is made all the more evident when reviewing the price changes by age group. All vehicles aged over two-and-half years old reported a month-on-month decline in values.
Whenever prices are in seasonal decline there is always a greater likelihood that delaying a sale will simply result in a lower price being accepted at a later date, says NAMA.
In October, the average first time price was £8,100, whereas cars sold in that month that were re-entries were selling at an average of £7,575, almost £525 less.
Even though part of the price difference could be explained by the latter being offered in a slightly inferior condition, the message to vendors is clear – ‘the first bid is generally the best bid’.
Mike Pilkington, NAMA vice chairman, said: “The pace of the auction market began to slow at the beginning of November with prices in the Fleet sector falling 4%.
“However what is encouraging is that auction stock has begun to reduce and as this continues the rate of further price falls will also reduce.
“NAMA believe that during November the underlying stock shortages that are a continuing feature of the long term market will become evident once again.
“We would also expect to see a few dealers start to proactively buy for January. If corporate vendors indicate that they may withhold cars from the market we could see close to stable prices in November.”