Reduced supply in August has resulted in a price bounce according to BCA’s latest Pulse report. The figures show that, on average, values increased by over £250, with fleet/lease and nearly-new stock showing substantial month-on-month rises. Demand for older, lower value dealer part-exchange cars was broadly flat, with just a £2 difference recorded from July.

Values across the board improved to £5,888 from the £5,633 recorded in July – a £255 increase that was equivalent to 4.5% rise. Year-on-year, August 2011 is marginally behind 2010, with a £17 difference over the period. Compared to two years ago – when the market was accelerating rapidly - 2011 is £345 or 5.5% behind.

Given a general shortage of stock during August, conversion rates also improved as professional buyers were active, with many buying early to offset the expected rises in demand for the best retail quality stock that are traditionally seen in September. It is the third year running that August has seen average values improve over July, which suggests this is now an established market pattern. Performance against CAP Clean improved by around half a point to 96.1%.

BCA communications director Tony Gannon commented “While August has been a welcome fillip for vendors, the longer term prospects suggest that volumes will rise from mid-September onwards. This traditionally exerts some pressure on average values and conversion rates and that could be even more pronounced this year. The continuing uncertainty surrounding the economy and the pressure on consumer disposable income will have a detrimental impact on the retail used car market.”

“While there has been some softening of market conditions over the summer months – as would be expected – vendors have been shielded from any real price pressure by the low stock levels. Demand for the limited supply has been just sufficient to keep the market balanced and healthy conversions have been achieved. However, as volumes rise significantly in the weeks following the registration plate change, there is no indication that demand will increase at a similar rate.”

He added “While the best quality stock – the Condition 1 and 2 cars – will continue to attract a lot of buyer attention and achieve strong prices, it is the poorer presented vehicles that will inevitably begin to struggle. These vehicles need to be priced sensibly if they are to be sold should the market conditions begin to tighten.”

Fleet values bounced for the first time this year, halting a run of six consecutive monthly falls. Month-on-month values improved by £222 to £7,222 in August, while CAP performance improved by over a point to 97.24%. Year-on-year values are behind by £113 or 1.5%.

The part-exchange sector remained steady – as it has done for the majority of 2011 – with a negligible £2 decrease to £2,670 recorded from July. Year-on-year figures are ahead by £91 (3.5%). Performance against CAP moved up a point to just under 92%.

The nearly-new sector saw values increase from £17,897 to £20,490, equivalent to a 14.4% increase, but model mix will have been largely responsible for the changes in this sector as volumes are so low. Performance against CAP Clean fell by 1.5 points to 99.5%.