Director of valuations at Cazana, Rupert Pontin, takes a closer look at June’s car retail sales performance, and offers his analysis of the significant changes and trends that have emerged in the last year.
Reviewing the used car market as a whole, the Cazana data demonstrates some interesting changes in retail pricing in comparison to the data from June 2017. Chart 1 looks at the performance of key market sectors. This month the chart also shows the performance of the younger quickchurn market that is under increasing scrutiny due to pre-registration activity.
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It is interesting to learn that despite high levels of nearly new cars being placed in the market, values at one year have remained consistent with 2017. This could be perceived as positive, as it suggests that while new car registrations are enhanced for commercial reasons, this actually has not caused an issue in the used car market.
However, there has been a shift in performance in the ex-PCP sector, and here it would appear that retail pricing has been adversely affected year-on-year. In a change to the stability demonstrated last month, there has been a two-percentage point drop in performance since June 2017, and the overall figure rests at 60% of original cost new.
Some industry pundits have been expecting this on the basis of increased volumes in the market, but it is wise to look at the greater detail to understand whether other factors such as fuel type and style of vehicle have been the drivers behind this change.
Ex-fleet cars have seen a small improvement in retail values, with an upturn of one percentage point year-on-year. This may come as a surprise given that, at this age and mileage, the sector is weighted in favour of diesel cars. This could be indicative of the fact that the volume of fleet cars in the wholesale market has remained, at best, consistent as fleets continue to show reluctance to change product. This is in part due to concerns around the impact of the forthcoming Worldwide Harmonised Light Vehicle Test Procedure changes.
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By GlobalDataWith new diesel registrations continuing to fall rapidly, the used car market remains under the spotlight, and Chart 2 shows performance of diesel cars against petrol versions in the all important three-year-old market. This chart demonstrates the rise in retail pricing for AFVs over the last 12 months.
While it shows a level of volatility for AFVs, there is a clear upward trend not currently shared by ex-PCP petrol and diesel product. Consideration must be given to the type of AFV appearing in the market, which partly explains the volatility. Of specific interest is that from August 2017 retail pricing, driven by consumer demand, took a marked upturn.
This happened off the back of a decline in pricing for other fuel types, and coincides with a period of intense media speculation around unclean fuel types. To summarise, it is clear that the used car market in June has retained stability in the face of climatic and sporting disruption. There have been fewer consumers on the pitches, but those that show interest have not only done their research online using retail pricing data, but have then been in the market to buy and not to browse.
