Strong demand sees used values outperform the seasonal trends

Cap HPI say healthy demand saw stable used values in Black Book live during March with a small average increase of 0.1%. 

While the average three-year-old/60,000-mile vehicle saw a minimal increase, some sectors saw stronger rises, with convertibles increasing by 1.6% and City Cars by 0.5%.

Derren Martin, senior editor of Black Book said: “Supply and demand have been well matched in the used car market in 2016. According to data received by Cap HPI, the number of used cars sold so far this year is up 7.7% on the same period in 2015. The increased volumes of vehicles are finding homes.

“On the whole, trade values have been very stable since the turn of the year, with average reductions in Black Book live since that time being less than 1% and in the case of City Cars, values have actually been on the increase. This theme continued during March, although there were some very early signs of some prices tailing off slightly in the week leading up to Easter.”

Cap HPI says one side-effect of the strong overall trade values since early January has been a compression of dealer margins, plus very early signs of a reluctance by some to pay the high prices in the market, as the consumer is unwilling to swallow increased forecourt prices.

With the market generally being stable, it is important to note that there were variances with different mainstream models in Black Book live, even those within the same sector. For example, latest incarnations of the Ford Focus and Peugeot 308s dropped in value, whilst Volkswagen Golf and Volvo V40s increased.

Feedback received by Cap HPI points towards pre-registration activity being fairly light year-to-date. This is predicted to change during the final few days of March. More than one-third of franchise dealers questioned by Cap HPI reported that pre-registrations were likely to make up over 16% of the total in the first quarter of 2016.

Auction conversion rates remained healthy as expected, and analysis of data received by Cap HPI showed a 14% increase in cars sold through auction, compared to the same number of working days in March 2015, illustrating the strength of the used car market this year, as well as the fact that auctions remain a popular way of buying and selling used cars.

Martin continued: “Due to steady registration increases since 2012, there are now more cars in the used car market than there have been over recent years, plus increased pressure from new car, particularly finance, offers.

“There will also be an abundance of late-plate cars appearing in the market over the next few months, indeed “16” plates were already being advertised on popular used car websites from the early days of March. Add in the pressure being applied on margins and it all seems to point in the same direction. This negative sentiment, however, does need to be tempered with the fact that retail demand for used cars remains healthy – consumers are still actively buying, interest rates are low and the economy remains strong.”