Industry breathes a sigh of relief as market remains stable

There is further proof that the used car market is settling back into a more typical seasonal pattern, according to Manheim and BCA.

Manheim Remarketing reports that the fleet sector increased by 2.9% (£169) to £5,960 in September following four consecutive months of falls.

At BCA, fleet values rose by a significant 5.1% (£376) from £7,335 in August to £7,711 in September – the largest monthly increase recorded in the past 12 months.

It is positive news considering the rollercoaster ride the industry has had to endure over the past two years and Mike Pilkington, managing director of Manheim Remarketing, expects it to continue.

He says: “In the short term we do not expect to see any unreasonable 
pressure on values or conversion rates and, with no huge influx of vehicles anticipated during the next few weeks, the immediate future looks set to remain stable.”

Examples of increases in values for fleet at Manheim in September included small hatchback up by 4.6% (£183) to £4,180, large family vehicles up by 4.4% (£203) to £4,786 and MPVs up by 11.9% (£700) to £6,593.

And, at 49 months, the average age of fleet cars is six months higher than at the beginning of the year with mileage up by 7,088 over the same period.

Pilkington concludes: “The increase in fleet values suggests the return of the traditional autumn seasonal uplift and improved buyer confidence.”

At BCA, fleet and lease values increased in all three sub-sectors, suggesting that demand was also broad-based and it was the product profile itself that was attracting the buyers.

Volume fleet and lease values improved by nearly £300 to £5,714, which equated to a 5.4% increase, with CAP performance improving by more than 2.5 points.

Meanwhile, budget fleet and lease car values rose even faster, with £676 added over the month, equivalent to a significant 19% increase, with CAP performance increasing by nearly five points.

However, the caveat is that numbers are low in this sub-sector and model mix has a disproportionate influence on value.

Nevertheless, premium fleet models also increased in value from £10,808 to £11,077 – a £269 increase that was equivalent to a 2.4% rise and the second highest value recorded in the past year.

The figures come against a backdrop on a new car market that is continuing to slow, with September falling 8.9% to 335,246 units – the second lowest volume for the month since 1999 when twice-yearly registrations were established – and according to the SMMT, private demand fell again in September, but fleet demand posted solid growth.

“With new car sales continuing to be slow, dealers are looking to used cars to deliver profitable retail opportunities,” says BCA’s UK operations director Simon Henstock.

“Demand remains high for cars in good, ready-to-retail condition and values for the best examples can outstrip guide expectations by hundreds or even thousands of pounds.”

Like Pilkington, Henstock recognises a returning confidence to the used car market, despite there still being talk of recessionary issues.

However, he adds: “We are likely to see values under a little more pressure from now until the Christmas period, but certainly no return to the dramatic falls we experienced two years ago.”