VRA reports 'stable' trading conditions in used car market

With the market entering a traditionally quieter spell in the run up to Christmas, the Vehicle Remarketing Association (VRA) is reporting continuing stable trading conditions.

In line with VRA predictions last month, prices are nudging down, but only slightly, as lower volumes of stock in the wholesale market are met with corresponding demand.

It says the search for those rare two to four year old ‘ready to retail’ lower mileage vehicles is clearly getting harder and there are signs that dealers are hanging on to a significantly higher proportion of their part exchanges, in order to keep forecourts stocked up.

Demand for older vehicles, over five to six years is also still strong, with auction conversion rates in excess of 75%. This remains significantly above the current overall average conversion rate of 65%, which in itself is a very respectable performance so late in the year.

It reports some downward pressure on the values of late year low mileage vehicles is evident, as a result of a number of highly attractive new car incentives. This is diverting a degree of consumer attention away from used models but, even with supplies of late year vehicles increasing, this is not causing a major problem at the moment.

However, with values of late year vehicles having recovered well since the depths of recession, they will reach a point when they may not appear to be as attractive as they once did.

Perhaps this point is not too far away and amidst the competitive new car market, it would not be surprising if the values of very young vehicles came under some more pressure in the near future, says the VRA.

With the turn of the New Year only three weeks away, VRA members expect the remainder of December’s wholesale market to remain strong. Some dealers, mindful of strengthening interest and potentially rising prices in January, will inevitably start stocking up prior to the Christmas break and this should be enough to support the market to year end.

It says concerning bi-product of the tough economic times is the increasing number of vehicles having missed their routine service and maintenance intervals. Dealers are having to correct more faults than normal to bring them up to retail standard and, should this trend continue, it is expected that they will begin to adjust their bids to reflect this.

So, the VRA is advising its members to be aware of the hidden cost of incomplete service records. Further evidence of this comes from the recovery companies who are reportedly attending an increasing number of breakdowns caused by lack of basic maintenance.