There is now clear evidence of a recovery in the used vehicle market.

Residual experts have remained sceptical about whether the record auction attendances earlier this year and the rising prices dealers are paying for used cars signalled the start of a recovery.

However, three months into the year and with auctions still reporting high attendances and rising prices, the industry is beginning to believe the tide has turned.

Manheim said its latest results showed “a continued recovery in wholesale used car prices” last month, which followed very strong sales in January.

“This uplift in used car values in the first two months of 2009 has wiped out the downturn in wholesale prices seen in the last six months of 2008,” it said.

The latest BCA figures show average used car values rose for the fourth month running. February posted a £435 rise against January (up 8.4%), which was itself £300 up on December’s figures.

Performance against CAP last month increased by over six points to 103.6% - the highest monthly figure on record for all-sector values since BCA began reporting.

“There is now little doubt that used values are making a seasonal but possibly significant recovery from the low points of last year,” said BCA communications director Tony Gannon.

“It is likely that average prices will be maintained at this higher level.

"With no indications that volumes are going to ramp up hugely over the next few weeks, BCA expects March to remain fairly strong and with a late Easter, April may also be relatively buoyant.”

A recent BCA auction of BMW vehicles returned “exceptional results”, with 100% conversion and over 1,400 cars selling for an average of 109% CAP Clean.

"The market was very strong in January, February was fantastic and March - well we are only a few days in - but I don't see any signs of this stopping,” said Tony Dean, BMW’s group remarketing manager.

“It could continue for the rest of the year or until the level of used car part exchanges coming into the market increases dramatically."

At the recent auctions, the BMW X3 averaged 116% of CAP Clean, which will surprise many as the used 4x4 sector has “taken a beating” according to CAP’s Black Book.

“4x4s were the first to experience the onset of accelerated depreciation which accompanied last year’s downturn,” said CAP.

“But this was also the sector which led the current bounce-back...

"By last month this was the best performing sector in terms of average used value movements.

"This trend continues into March.”

Manheim’s average used car values last month were £6,294 - 34% of cost new – which is comparable to the market in June 2008.

Average age and mileages have remained largely the same at 48 months and 47,000 miles.

Last month, Manheim saw ex-fleet vehicles up by 8.6% to £5,545.

“The continuation of this significant surge in demand in both the wholesale and retail markets and the extent of the resulting price recovery have certainly surprised most of us,” said Mike Pilkington, managing director, Manheim Auctions and Remarketing.

CAP said dealers remain hungry for stock and auction conversion rates are pushing 100% in some places.

“In the leasing sector, conversion rates have breached the 90% barrier for the first time since the measure was introduced to Black Book and the percentage of CAP Clean achieved has risen since last month from 95.1 to 100.2%,” it said.

“This market is one of the strongest many can remember.”