Fleet News

Used market remains strong despite new car sales push

Sales activity in the used car market is maintaining momentum and preventing severe erosion of trade values, despite the on-going push for new car registrations.

That’s the view of Black Book Live, the real-time car valuation trending tool published by CAP Automotive.

Research for Black Book Live during July has revealed trade values falling by an average of 1.6% at the benchmark three years/60,000 miles point, which is not unusual at this point in the year.

What is unusual about the strength of the used market at present, according to CAP, is that relative stability is being achieved in the face of soaring new car sales – a phenomenon which has historically caused significantly increased depreciation across the board.

When new car sales increase, the diversion of attention from the used market has often historically seen reduced demand and values falling more quickly. The accompanying increase in nearly new vehicle availability in the used market has also often caused a severe imbalance of supply and demand, forcing later plate used car values to fall.

This year, however, the used market has remained relatively immune to the performance of new cars, which saw a 13% increase last month compared with June last year. The UK remains the European automotive sector’s hot spot for new car sales, with 16 consecutive months of growth, while new registrations across mainland Europe languish in the doldrums.

The only area of the used market which does show signs of particular trade price pressure is smaller cars, which are depreciating more quickly than the market overall. This is likely to be the result of especially aggressive pricing in the new market, along with highly attractive PCP deals, making a new small car more affordable than for many years.

CAP has also identified that independent used car dealers, including the large car supermarkets, are leading the charge on used car retail sales as their franchise counterparts focus on new registrations. This has led to a surge in confidence for independents, who are happy to see less competition for stock in the trade market because slightly lower trade values mean they can preserve their own margins or price more aggressively on the forecourt.

Black Book Live senior editor, Derren Martin, said: “Although values are falling this should be seen in the context of a drive for new car sales which in previous years would have caused a slump in values and real pain in the used market.

“This year the whole market is benefiting from sustained retail demand and we expect nothing more severe than typical seasonal depreciation between now and September. The holiday season, together with the preparations for the ‘63’ plate introduction, points toward August being a quiet but orderly market.”
 

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