Fleet News

CAP dismisses ‘scare stories’ on market impact of PCP returns

Fears that the explosion in new cars financed on PCP will lead to oversupply in tomorrow’s used market are unfounded, according to CAP.

Forecasting experts for CAP Gold Book, the independent future residual values benchmarking tool, say the expected increase in PCP part-exchange vehicles will not adversely impact market stability for the foreseeable future.

Although CAP has long been reassuring customers privately that PCP growth is not an impending issue for those exposed to future residual values, concerns continue to be voiced elsewhere around the question of an approaching imbalance of supply and demand in the used market.

Gold Book senior editor Dylan Setterfield has moved to quell fears with a three-point argument against what he describes as ‘scare stories’ about future ex-PCP used car supply.

Setterfield said: “We do expect there to be more PCP part exchange vehicles coming to market going forward, but we do not expect there to be enough volumes to adversely affect the market in the short term.

“For vehicle sectors where new car supply is a significant factor in used car price changes, increases in registrations have already been incorporated into our forecasts. However, it is also important to emphasise that the increase in PCP is not synonymous with new car sales growth.

“A lot of the growth in PCP is cannibalised from other sales channels, whether that be other credit options or outright purchase.

“There is also a fear that these vehicles will ALL come back in 3 years' time and some observers have been peddling scare stories to this effect.

“The reality is that manufacturers are putting offers together on a wide range of durations and the vehicles will come back at different intervals.

“Most of them, if renewed with the same manufacturer, will come back at around 6-12 months before the scheduled contract end date and will form a staggered chain of used car supply.2


Click here for remarketing best practice and procurement insight

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment

Comments

No comments have been made yet.

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee