Used car values close to peak, says SMA Remarketing

The rise in new car sales will start to feed through into used car prices during Q1, says Eddie Thomson (pictured), group sales director at SMA Vehicle Remarketing and he does not foresee any significant fall in values into 2013.

With new car sales volumes rising by 5% in the year to date and with manufacturers keen to support the UK market, in light of significant sales falls across much of Europe, SMA are forecasting an increase in remarketing activity at the start of 2013. In particular, SMA expects to see the fleet sector being more active, taking advantage of support programmes created by manufacturers to ensure new car sales momentum gained in 2012 is sustained.

Commenting upon the dynamics of the current market, Thomson said; “From a remarketing perspective, optimising the timing of remarketing will be a balancing act. An increase in stock through remarketing channels is welcome because demand has been outstripping supply across our Group and I’m sure many others. However, this stock may come into market at the very time when used car activity is at a seasonal low and just when levels of new car support mean that private car buyers, who until recently were focused upon a used car, may now switch to buying a new model. Trade buyers are aware of this. Therefore, we expect the twin forces to create a small correction is used car values.”

However, SMA does not foresee values falling significantly, simply because of the long tail of stock shortages caused by the extended fall in new car sales through the double-dip recession.

Maximising used car values will continue to be about providence and condition. Thomson concludes,“Used cars may have been in short supply; however volume trade buyers have been working to buy for a shorter forecourt cycle. Buyers remain cautious. They will pay a premium for well-prepared stock that they can turn around quickly, but it must fulfil this requirement.

“As sellers look to maximise the value of product, having a cost/value estimate completed for every car (to include ‘time to cash’) is invariably a smart part of maximising value. Certainly the activity in our Technical Service centres shows that many sellers are taking advantage of this approach.”