The supply of used cars has increased, leading
to lower trade used car prices, CAP has announced. This has eased
some of the pressure felt by dealers frustrated this year about
competition for trade stock and resultant price inflation.
The change is largely due to an influx of part exchange cars
into franchise dealers after the March plate change. With those
dealers now focusing on retailing their part exchanges, competition
to acquire stock in the open market has reduced, leading to a
slight weakening of values.
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CAP’s Mike Hind said: “A year ago the increase in volume was
much more of a cause for concern because it was largely driven by
dealer self-registrations. This was due to severe weakness in the
new car market and it meant a sudden and large influx of late plate
cars into the market.
“This time more of the March new car sales represented genuine
business and the fact that there are around 15,000 fewer 0-12 month
old cars advertised for sale at present than a year ago is evidence
for that.
“The dynamic in the trade market has clearly shifted from that
of a few weeks ago, when franchise and independent dealers were
competing hard for every quality used car and consequently finding
it difficult to maintain satisfactory profit-per-unit. Now the heat
is off, we hear reports that margins are improving for many.
Although franchise dealers have not completely given up buying in
the open market, most had finally managed to fill all their
long-standing forecourt spaces by the third week in April.
“Franchise dealers are also readjusting their used car profiles
to focus back onto younger cars, which has led to something of a
glut of 5 to 7-year-old cars, offering much more choice in the
marketplace for independents. The car supermarkets are very active
in the trade market and some are being quite aggressive in their
pursuit of the best cars for retail. We have seen some deploying
more buyers than usual at sales, but leaving with fewer purchases,
because they are ensuring they don’t miss any opportunities to
cherry-pick the best vehicles.
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By GlobalDataHind concluded: “Despite the general increase in volume, the
fact that the majority of dealers tell us that their retail
business is ranging from satisfactory to strong means we believe
the medium-term stability of market prices is not a major
concern.”
