Analysis
Jigsaw Finance’s Nigel Hawkins gives his observations on the PCP market
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While new car sales rise in 2013, the legacy of the poor economy has taken its toll on used car demand and, more importantly, supply. Dealers have reported "steady" interest for used cars, but there is still a shortage of stock in the 3-4 year age group which provides the ideal retail used vehicle, traditionally from companies de-fleeting vehicles. But the economy has caused changes to businesses’ replacement cycles. When these vehicles eventually filter into the market they are showing heavier wear and tear along with higher mileages.
Recent FLA statistics have demonstrated cars bought on finance by businesses in April were up by 4%, but down 2% in the first quarter, and therefore why the lack of supply of ex-fleet cars currently exists.
CAP reports the higher-mileage ex-fleet car is influencing the widening trade price between better vehicles and those requiring significant refurbishment. The recent period of heavier depreciation in trade prices has slowed down now the part exchanges taken in from a successful March have washed through the system. CAP’s outlook for the used car market generally remains positive.
CAP also highlights growth in rental vehicles registrations, which could put pressure on late-plated stock values, especially from those manufacturers who are most active in these areas.
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