A release of pent up demand in has led to a positive January in the used car market.

But, CAP warns, this is not the hoped for recovery of fortunes.

"The explosion of used car trade and retail activity witnessed in January was almost as remarkable as the nosedive taken by the market in April of last year.

Every measure of market conditions saw a big positive swing as auction halls filled with buyers and forecourts buzzed with retail interest.

However, this cannot be interpreted as an end to the used car market downturn because most of the underlying factors that drove it are still in place.

Rather, it seems that something of a waiting game for many retail buyers has now come to an end and that January’s positive conditions represent the release of some pent up demand that had accumulated during the uncertainty of the second half of 2008.

In other words, those people who were seriously intent on changing their car waited until the economic outlook was clearer and Christmas was out of the way to make the move.

It seems likely also that the oft repeated message - ‘cars have never been such good value’ - has hit home for many people.

For example, CAP itself contributed to the message in last month’s Granada TV ‘Tonight’ programme in which viewers were strongly urged to take advantage of today’s deals.

And of course another factor which is working in the used car market’s favour is the weakness of the new car sector.

Analysis for the February edition of Black Book highlights the remarkable ‘bounce back’ of 4x4s which - for the 2nd month running - outperformed most of the rest of the market in terms of trade values.

This is perhaps not surprising in view of the sheer value on offer now against a background of significantly reduced fuel prices.

Also working in the used market’s favour is the level of trade car supply, which remains notably low, to the extent that even cars requiring some refurbishment have been attracting solid trade attention.

But despite the fact that some dealers have described the past few weeks as their best time for several years it would be unwise to call this a recovery.

The UK banking sector remains in crisis and it is not at all clear when it will be out of the woods or even if there are further shocks to come

Unemployment is rising fast and is bound to damage overall consumer confidence further.

The bigger picture is slightly better understood now by the retail public but credit remains severely restricted and is likely to remain so for several months even if recent government initiatives gain traction.

Looking at the sector performance analysis for Black Book values were largely stable moving into February and it is notable that some of the vehicles that were under most pressure have enjoyed a resurgence in demand.

Small rises were noted for average 4x4 values at 3yr/30 and 3yr/60 and for later plate compact executive cars an average rise of 1.1%

Convertibles are under the seasonal cosh and coupe cabriolets are severely underperforming, no doubt as discretionary ‘fun’ purchasing gives way to favouring more practical transport.

It remains to be seen where the market is heading in the medium turn but CAP’s view that conditions will generally continue to deteriorate until stabilising around the summer remains unchanged."

Black Book February 09 - average value movements
 

    1yr/10k   3yr/30k   3yr/60k
 
 
 
City Car   0.1%   0.2%   0.1%
 
 
 
Supermini   0.7%   0.7%   0.7%
 
 
 
Lower medium   0.1%   0.0%   0.0%
 
 
 
Upper medium   -0.4%   -0.4%   -0.4%
 
 
 
Small executive   1.1%   -0.4%   -0.4%
 
 
 
Executive   -0.8%   -0.4%   -0.2%
 
 
 
MPV   -1.3%   -0.2%   -1.5%
 
 
 
Mini MPV   -0.3%   -1.5%   -0.5%
 
 
 
4x4   -0.4%   0.4%   0.5%
 
 
 
Convertible   -1.2%   -1.4%   -1.4%
 
 
 
Coupe Cabriolet   -3.2%   -4.0%   -3.9%