Fleet cars entering used car market are getting older, says BCA

Looking at the half year averages, the age of cars sold has been rising since the back end of 2008 and went above 61 months for the first time on record in 2011, says BCA.

Average mileage has also been rising over time and nearly reached 59,000 in the first half of this year, another market highpoint.

There appears to be a general move towards cars being older and higher mileage when they are sold in the wholesale arena, says BCA. This would suggest whoever owns and operates a car – motorist, commercial organisation, leasing company – they are keeping it and using it for a longer period before it is sold.

In fact, BCA suggests this may become a fact of life for the used market over the next two or three years, as the available car parc becomes ‘older’, due to the lower numbers of new cars being sold.

Drilling in to the fleet and lease data shows that the average age of fleet cars when they were sold is rising and that process seems to have accelerated this year.

It is also significant that it is the first time on record that fleet and lease stock sold at BCA has averaged over 40 months across a six-month period.

Complementing this, the trendline for the average mileage of a fleet and lease vehicle is also climbing for the first time in recent years – even a year ago the trend was still downwards. However, in the first quarter of 2011 it has broken the 49K ‘barrier’ for the first time.

The quarterly data is also revealing. With the difficult start to quarter two in 2011 endured with multiple Bank Holidays in April, the final analysis shows average values fell by 3.4% compared to Q1.

Unsurprisingly, average used car sold values fell in April, as buyer confidence was fragile and demand slowed due to the combination of the late Easter, the Royal nuptials and the hottest April on record. The markets recovered in May and average values rose, but by June an element of seasonality saw average used car sold values declining again.

Average quarterly values are now at their lowest since Q1 2009 and are broadly on a par with those recorded just before the onset of the ‘credit crunch’ in 2008.

This suggests the next quarter figures could provide a good indication of where the market dynamics are going – a climb might indicate the used market is following seasonal patterns whereas another fall would set a quite worrying precedent of decline.