The Vehicle Remarketing Association (VRA) has launched its latest monthly headline report into the remarketing sector for April/May.

It looks at a number of the factors which are driving supply and demand across the entire industry and is designed to act as a market commentary rather than a detailed report.

A changing market

In the past 3-4 weeks the used market has changed dramatically with it becoming a buyer’s market with prices trying to realign themselves across the market and the valuation guides moving in response to the varied market conditions.

April’s 18 days of trading and two weeks of school holidays didn’t help the used sector with fewer trade buyers in the market and when they have been buying they have been particular about what stock they bid on and what price they are prepared to pay.

A number of car brands are seeing disruption from the Japanese earthquake with delivery delays further extended and production capacity reduced so putting further pressure on the new as well as used market. This situation may even continue into quarter three such has been the impact of the natural disaster on the entire motor industry.

Some manufacturer ex-management and fleet demonstrator replacement programmes are now being frozen which will restrict the supply of nearly new stock into the market. Prices have remained constant in this sector due to the reduced stock availability and this looks set to continue.

Long lead times and reduced manufacturer production have also impacted on the rental fleets, forcing them to extend their replacement cycles, thus restricting the number of cars being sold off into the used market.

Retail demand for new cars in general dropped off in April so further restricting supply of part exchanges into the second hand market. All of these market situations go some way to further restricting supply of used cars coming into the market, which longer term will also impact on the supply of used cars in 2-3 years time.

At the higher age and mileage end of the market, some franchised dealers are still struggling to come to terms with selling 60-70,000 mile cars. However, those who are retailing these types of cars are attracting a new type of customer to their business.

Following a pattern of increased interest by consumers in smaller diesel engines and therefore lower running costs, the market moved yet again in April, early May. 1.6 litre turbo diesels are being preferred to larger 2.0 litre and above engines, with less interest in the larger diesel engine models.

That contrasts with the higher end of the 4x4 sector where the likes of Range Rover Sports are worth £7-8,000 less than they were eight weeks previously. The smaller 4x4 SUV sector hasn’t been impacted so severely with the right specced models finding new homes, albeit at slightly lower prices than two months ago.

May and June are being predicted as recovery months for the used car market with the last of the remaining dealer part exchanges from the new registration activity in March being cleared and the fleet and leasing stock finding buyers in larger quantities.

The used LCV market continues to hold up well with prices strong, despite generally the age and mileage of stock being slightly higher than in previous years. A growing number of used vans are reaching the market due to fleets replacing their aging vehicles and more part exchanges around due to smaller businesses finally receiving credit to buy new vehicles again.