August is traditionally a quiet month in the car industry, and especially so in the auction halls, so that fact that used values have risen again shows how little used car stock there is out there.

And what stock there is on offer is attracting serious bidding, especially from the franchised dealer groups who are desperate to fill empty spaces on their forecourts.

Overall BCA saw a 3% rise in values last month, while Manheim registered a 2.6% increase. As a result, the average car at auction now fetches £6,223 at BCA and £7,390 at Manheim.

Ex-fleet stock has recorded similar increases – the dearth of late plate models has forced buyers to look at the traditional three-year-old ex-fleet models offered.

As a result, fleet values in August increased by 3.1% at Manheim and 2.7% at BCA.

According to CAP Black Book, said: “Conversion rates were consistently strong throughout most of August, again driven by the need for franchised dealers in particular to maintain adequate stock levels.

“One of the ways this is most apparent is in the additional number of participants taking advantage of the online bidding facilities at BCA and Manheim.

“Some dealer networks have now modified their usual approved used criteria simply to maintain adequate levels of business.

"The lack of later cars has forced many to look toward older cars, which means typical ex-fleet stock continues to enjoy strong demand.”

And the lack of used supply is not just a temporary blip, with Manheim Auctions and Remarketing managing director Mike Pilkington predicting that ‘stock will remain in short supply, and it could be for up to the next two years’.

Several factors have conspired to limit used car supply – the depressed new car market has seen fewer trade-ins, scrappage has seen a blip in new car registrations but all trade-ins that qualify for the scheme are 10 years old or over and have to be scrapped, and manufacturers have been consistently reducing their exposure to short-cycle business such as supplying courtesy cars and daily rental companies.

And they have even been lengthening the stay of in-house management cars – usually these models stayed for six months but that is being extended.

The view on supply is echoed by EurotaxGlass’s managing editor, Adrian Rushmore, who does not believe there will be any change in supply levels until the middle of next year at the earliest.

He said: “Even if manufacturers decide to resume supply to daily rental firms in 2010, the terms of the agreement are likely to stipulate an extended tour of duty of at least 12 months, which will simply prolong the period of used car drought.”

August’s used car market performance caps a remarkable 15-month spell which has seen the market rally massively following its decline as the recession took hold late last year.

Average fleet values fell to their lowest point in December at £5,471 at BCA and £4,676 at Manheim. Since then, values have risen to £7,575 and £6,681 respectively.

Pilkington said: “This is one of the strongest August periods we have seen, reflecting the continuing high levels of activity reported across our UK auction centres.”

BCA’s communications director Tony Gannon added: “Demand continues to be strong and values have risen by £373 over the rolling three months – despite this covering the summer holiday period where values have traditionally softened in recent years.

“As last month, stock levels remain relatively low and this certainly has had an effect when combined with the continuing demand. The vast majority of vehicles being offered are sold first time and conversion rates remain exceptionally high.”

 

Sector-by-sector analysis of used car market values

4x4s

Things remain positive in this sector, with prices increasing by 2% at three years and 60,000 miles.

Diesel values have continued to rise on most ranges.

However, many in the trade are reporting they are seeing some early signs of cooling in this sector.

And when the market does begin to soften, this will be one of the first areas to show the signs.

Convertibles

Historically values in this sector tend to begin falling away at this time of year, and although there are some signs of the rate of demand cooling the sector still moved up by 1% at three years/60,000 miles, compared to 2.5% last month.

Superminis

Demand in this core sector has not diminished, with values rising by 1.7%. For the first time this year, a number of late place vehicles have been available for sale.

Small executives

With an overall price movement of 0.8%, this sector shows some slowing and levelling of values.

Cars on offer with the correct specification, a good colour and in clean condition will still attract plenty of interest, but basic cars in a flat colour and below average condition are beginning to see interest slipping.

Saab’s 9-3 has enjoyed a strong month, with a 4.9% rise at one year/10,000 miles.

Source: CAP Black Book