Average values in the fleet sector increased in March, according to Manheim and BCA’s latest analysis of the used car market.

Manheim report that the fleet sector was up by 5% (£324) to £6,749 following a fall of 2.8% (£184) in February, with overall average values increasing by 3.4% (£245) to £7,453.

Meanwhile, figures from BCA reveal that fleet values rose by 3.1% (£229) to £7,593 - a third consecutive month of growth – while overall average values fell by 2.8% (£168) to £5,791.

Year-on-year, fleet values remain ahead by £967, lower than the figure recorded over the past two months, according to BCA.

Differences in average prices between BCA and Manheim were down to the model mix on offer at individual sales.

“This month’s figures suggest the used car market is currently underpinned by plenty of demand across the board,” explains Tony Gannon, communications director at BCA.

But Mike Pilkington, manager director of Manheim Remarketing, added a word of caution

“Although there tends to be a softening of used car demand around the General Election, it’s hard to see much impact when the timing has been so well predicted,” he says.

“Nevertheless, as we proceed into the second quarter of the year we would expect values to fall.”

Pilkington’s prediction echoes Glass’s warning that bumper showroom business could slash values by up to 5% (Fleet News, April 15).

“An increase of almost 30% in fleet and business registrations means significant numbers of three to five-year-old cars will be added to existing used stock and this will have an erosive effect on prices,” explains Adrian Rushmore of Glass’s.

But Barry Watts, Aston Barclay’s operations director, believes that this will not affect April’s average prices.

He says: “We are still yet to see the impact of cars coming off extended leasing contracts, suggesting that April will replicate March.”

For online ex-fleet car retailer Carsite.co.uk, March started with a flurry of sales activity on the back of a good performance in February.

“Moving into April, we’re expecting to have to fight harder for our share of customers with up-coming elections and finances taking people’s priorities,” says Rebecca Ryan, marketing manager at Carsite.co.uk.

“However, we are expecting a resurgence of interest in smaller used cars with the scrappage scheme over and also to see some more mainstream used models become even better value by the end of the month as used fleet stock volumes increase.”

Within the fleet sector, examples of notable increases in values at Manheim in March included: medium family up by 4.6% (£265) to £6,058; large family rose by 4.1% (£205) to £5,221; compact executive increased by 3.5% (£289) to £8,632; mini MPV up by 8.6% (£447) to £5,670; and 4x4 rose by 5.9% (£750) to £13,357.

However, coupes in the fleet sector were down by 3.8% (£416) to £10,438, according to Manheim.

Large family segment crucial to fleets

Nearly one in five fleet cars at auction are large family vehicles and their price movements will influence average wholesale values in the fleet sector.

During months of growth over the last year selling prices have generally outperformed the overall fleet sector average, say Manheim.

However when the fleet sector falls large family vehicle prices drop below the average, indicating that they may be more susceptible to seasonal market dynamics than the fleet sector as a whole.

In the period March to August 2009 values of large family vehicles increased by 16.5%, while the overall fleet sector improved by just 10.6%, according to Manheim.

In contrast, in the last four months of 2009 values of this segment fell by 8%, while the overall fleet sector fell by 6.5%.

When comparing March 2009 with March 2010, large family vehicles have increased in value by 13.8% within an overall sector that is up by 11.8% over the same period.

Used van values continue to perform well

Strong demand continues to fuel prices in the used van market, as March recorded the second highest average value on record, according to BCA.

Used LCVs averaged £4,500 across the board in March, a fall of 1.8% (£85) compared to February’s figure.

Despite this, fleet and lease values rose marginally by £19 to reach £5,126 – a new record value.

Values have risen for eight out of the last nine months in the fleet sector and it is the highest average monthly value ever recorded for fleet and lease vans by BCA, as well as only the second time on record that average values for fleet and lease vans have exceeded £5,000.

“The used LCV market has seen an exceptionally strong start to 2010,” says BCA’s Duncan Ward.

“Values are significantly ahead of those recorded in 2009 and if demand stays at current levels we would expect prices to remain firm going forward.”

Meanwhile, Manheim’s latest monthly analysis for vans reports that at £4,237, average wholesale used van prices have increased by 14.7% since the beginning of the year.

The rise in average values compared to the equivalent first three months of 2009 was 11.3%, while the increase in March of 5.6% (£224) follows a rise of 4.4% (£169) in February and is the ninth month in a row that values have improved.

Average values have now increased in all but two of the last 14 months and compared with March 2009, average wholesale used van prices were actually up by a staggering 47.5% (£1,365), with the same average age of 54 months and average mileage 3,544 miles higher at 74,202, say Manheim.

Notable examples of the increases in average month-on-month values in March at Manheim included: large panel vans less than 3 tonnes up by 4.4% (£168 to £3,943); large panel vans greater than 3.0t rose by 2.5% (£104 to £4,234); and 4x4s up by 9.3% (£633 to £7,454).

At 54 months, average age in March was static when compared with February while average mileage was higher by 306 miles at 74,202.

James Davis, general manager, commercial vehicles at Manheim, said: “There seems to be no end to the continued increase in wholesale values at the moment and certainly no evidence yet of the traditional seasonal softening of the market.

“Demand remains very strong while the relative lack of supply continues to affect values

"The imminent General Election may create some market uncertainty during April but the overall upward trend in values looks likely to continue in the medium term.”

Stock shortfall could impact on prices

Weak new car sales in 2008 and 2009 will lead to a stock shortfall of three year-old ex-fleet cars in 2011, claims Carsite.co.uk.

With around 75% of fleet purchases expected back onto the second-hand market within the first three years, the sudden fall in new car sales from March to September 2008 is expected to create a mirror effect over the same period in 2011 for the number of used models available for sale.

“The used car market is heading into a significant period of change, with the next two years seeing even further reductions on the availability of ex-fleet vehicles,” explains Alistair Jeff of Carsite.co.uk

“Some used models have experienced significant increase in value over the last 12 months and the reduced supply from 2011 to 2012 should strengthen residual performances but potentially trigger further price increases.”

For example, the amount of fleet vehicles coming back onto the market in September 2012 is estimated to be almost 40,000 - or 20% - less than the number which re-entered the market in September 2009.

The number of used fleet vehicles being fed back into the used car market is expected to be stable until around March 2011, before decreasing by around 20% to September 2011 and a further 20% to March 2012.

After a year of supply at this level, ex-fleet stock is expected to increase in availability again as a result of the stronger new car sales performance in March 2010.

The variety and choice of ex-fleet models entering the used market over the next few years could also become more restricted as businesses focus on reducing the costs of running company cars.

A survey by GE Capital’s Fleet Services business revealed that employees are receiving an increasingly limited choice of company cars with 72% of fleets now offering only a single or limited range of models (Fleet News, April 15).

Companies affected by this reduction in choice have increased 10% in the last year.

 

Ex-fleet values, April 2010