Part exchange values rise to
record highs, reports BCA’s Tim Naylor.
Average values rose in January
following the disruption caused by the Arctic conditions and
shorter trading period in December. Both the fleet and lease and
part exchange sectors recorded notable value improvements, with
part exchange values reaching a record level.
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Fleet values increased sharply by
£504 (6.9%) to £7,739, to reach the highest monthly average value
since April 2010 and completely reversing the steep average value
losses experienced in October and November last year. Year-on-year
values are ahead by £480, equivalent to a 6.6% rise, with fleet
cars averaging 98.65% of CAP Clean in January, a rise of two points
over the December figure.
There was also significant value
growth in the part exchange sector, which climbed for the third
month running, even as sold volumes increased by some 83% over the
month.
Values rose by £132 (4.8%) to
£2,837 in January to reach the highest value on record for
part-exchange cars, improving on the previous high point of £2,762
recorded in September 2009. Performance against CAP improved by two
points to 95.5%.
The increase in part exchange sold
volumes was a reflection of both a good January and a very lean
December. And with new car sales remaining under pressure – down
11.5% to 128,811 last month compared with January 2010 – used car
activity remains the best profit opportunity for most dealers.
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By GlobalDataThe nearly new sector saw values
fall sharply, entirely due to the changing model mix sold in
January compared to the previous month. December had seen
exceptionally high values as a result of a higher%age of premium
value stock being sold.
As a result, over £4,000 came off
the average value as sold volumes almost doubled between December
and January. Average values fell from £21,691 to £17,619, with CAP
performance returning to 102% having risen to nearly 107% in
December.
The fall in average nearly new
values, combined with the much changed model mix over the month,
had the net effect of slowing the growth in the overall average
value.
Up to one year
old
As a result of the largely
anomalous price performance by sub-one year product in December, it
would be easy to be misled by the average values in January, which
appear almost universally under pressure.
With the exception of the smaller
and larger hatchbacks, every sector appears to have fallen back
quite severely. In fact, most franchised retailers have reported
stronger values on like-for-like nearly new models in January, and
that would have been reflected in the wholesale markets at
auction.
The falls in average value,
therefore, are a result of the changing model mix between December
and January, combined with the change in sold volumes over the two
months.
Before Christmas, a number of
prestige and high-value sales were staged, which under normal
circumstances would have had a small positive effect on nearly new
values. Come January, the traffic chaos was no longer an issue,
logistics operations resumed and vehicles flowed into the
remarketing arena, with sold volumes nearly doubling. Average
values naturally subsided to roughly where they were before
December.
One to three years
old
This age group gives a more
realistic picture of the strong demand experienced in January, with
average values rising in most sectors.
January’s price increases have been
generated by a highly competitive wholesale arena, suggesting that
retail sales have picked up quite dramatically. Nine out of 11
sectors improved in value, with only 4x4s really experiencing any
price pressure – down nearly 5% over the month.
Further evidence of the strength of
the January market can be gained from the CAP performance, which
ranges from 98% to 103.5% in a market where volumes have all but
doubled. Fleet and lease operators – the prime providers of stock
in this age range – generally had a very strong month.
Three to five years
old
This sector arguably recorded the
best price performance of all over the month. Ten out of 11 model
sectors improved in value by up to 9%, with the one exception –
convertibles – falling by just half of one%.
CAP performance recorded a notable
improvement over December, and while only 4x4s averaged over CAP
Clean, every other sector recorded values into the high 90s.
