Mixed picture for used vehicles in fleet sector

A dearth of stock in the used car sector may be helping to boost fleet values, but residual value gains may not be felt for every category of vehicle this year.

That was the view of delegates at last week’s annual Vehicle Remarketing Association (VRA) conference.
VRA members, who collectively handle and sell close to two million used vehicles every year in the UK wholesale market, suggest the best-performing vehicles will be in the small and lower-medium sectors.

In fact, 82% of delegates surveyed said cars in the small and lower-medium sectors are likely to be the most resilient over the next 12 months.

However, when asked which segment of the used car market is likely to be the least resilient, 46% suggested that cars in the upper-medium sector would suffer.

It’s a view that appears to be backed by the latest Manheim market analysis, which reports that the average values for superminis increased by 14.7% (£547 to £4,269) when compared with January 2011.

However, a fall in average age of 10 months to 38 months and a fall in average mileage of 4,995 miles to 28,269 will have played its part.

Meanwhile, the average value of small hatchbacks increased by 8.2% (£355 to £4,685) as the average age remained static at 46 months and the average mileage increased by 1,086 miles to 40,558.

But what also reveals the relative strength of these sectors is that volumes of used superminis and small hatchbacks from the fleet sector coming to auction increased by 5% to 22% last month when compared with January 2011.

Daren Wiseman, valuation services general manager at Manheim Auctions, said: “The growth in the volume of superminis and small hatchbacks seen at auction is not unexpected.

"Several years ago the numbers of these vehicles adopted by fleets increased as fears about economic uncertainty became a reality and I expect volumes of these vehicle segments to strengthen in the next few years.”

Average values in the fleet sector increased by just 0.5% (£33) when compared with January 2011 but by 10.7% (£596 to £6,157) compared with December.

And, remarketing professionals at the VRA conference again signalled good news for the fleet sector by giving the thumbs up for the performance of two to four-year-old cars during 2012.

An incredible 96% of respondents said they believed residual values would either remain stable or increase, with the majority (52%) predicting a rise of up to 5%, 18% suggesting a rise of between 6-10% and 25% saying residual values would remain stable.