A new report from BCA provides a high level view of the used car industry and its close relationship with the economy, the new car market and private used car buyers as and when the UK recovers from the prolonged economic downturn.
‘The Broad View’ by Professor Peter Cooke from the Centre for Automotive Management at Buckingham University provides some context for business sellers in the used car market as recessionary pressures continue.
The 40 page report examines the UK and European economic outlook, new car sales, used supply and the retail car buyer's perspective.
According to ‘The Broad View’ the lower volume of new car sales since the onset of recession will continue to define the used car sector.
Cooke said: “The current prolonged economic malaise and double dip recession has had a more serious and lasting effect on the car parc than its 1991/1992 predecessor, when new car sales dipped for just two years before making a sustained and marked recovery.
"It is likely new car sales will have been depressed for seven years before there is any sort of meaningful upturn.”
This relative shortage of stock reaching the used car market, allied to reasonable levels of demand has created a value windfall for the corporate fleet sector.
BCA has reported record values for three to five year old fleet and lease vehicles in recent months – with these vehicles representing the biggest volume sector sold by retail dealers.
Using SMMT car parc data, Cooke analyses the three to five year old company car disposal sector, and suggests that while volumes held up reasonably well until the end of 2011, last year was marked by a distinct fall in supply of ‘first time to market’ cars from corporate sources – down by around 20% from the peak in 2008.
Looking at the wider market, in 2006, there were over 12 million cars aged between 0 – five years in the UK. That number fell below 10 million in 2012.
Cooke said: “Fleet and lease sellers may well find that average wholesale values in 2012 will be among the strongest on record. It remains to be seen for how long values continue to improve, but there will inevitably be a slowdown as volumes start to rise.”
He also highlights the on-going mismatch in the mix between what businesses are buying for their fleets and what motorists want to buy.
“Fleet operators generally buy larger, more expensive cars than private buyers… predominately operating upper and lower medium cars, while seven of the top 10 privately purchased new cars are super-minis .
"Fleets also have a bigger appetite for diesel variants than motorists – nearly two-thirds of fleet cars are diesel, compared to just over a third of private purchases."
Spencer Lock, managing director of BCA, said: “The importance of both new and used vehicle sales to the health and wealth of the UK economy is undeniable.
"The company fleet and lease sector plays a vital role in driving new car sales and creating a supply chain for the used car sector and has an important part to play as the UK slowly recovers from recession.
"This report provides a valuable overview of some of the challenges the UK used car market will experience during that recovery.”