The wholesale used car market could be moving towards a ‘perfect storm’ of tight vehicle supply and rising retail demand, says Roger Woodward, managing director of online remarketing specialists, CD Auction Group.
As a result, Q1 2014 will be a good time for fleet operators to dispose of low-mileage cars and buy or lease new vehicles. Meanwhile, dealers must be ready to bid good money for good stock – and take the benefit in higher forecourt margins.
Looking ahead to the prospects for 2014, Woodward said: “The past 12 months have been characterised by a lack of mainstream, good used car supply and stable prices.
“We don’t see the tight supply situation easing much in Q1 2014 and this means values for the right cars are likely to remain high.
“This is partly about the maths: in Q1 of 2011 (3 yrs ago) fleet new car activity was pretty flat (up 1% over 2010) and retail activity slow (down 18% over 2010) in a post-scrappage dip. These are the cars that should now be coming to franchised used forecourts and are the core of the used market.
“They are going to be in short supply.
“At the same time, our professional fleet vendors say there is still an underlying reluctance among companies to invest in new cars, despite the huge incentives on offer from the manufacturers.
“The irony is that this is a good market to defleet into, if only fleet operators could overcome their natural caution. With some signs of economic recovery this could stimulate retail demand, pushing residual values even higher.”