The used car market remained busy moving into February, as the high level of stock purchase activity was justified by continuing retail business. 

A shortage of prime retail stock remains and although this is clearly a source of frustration for dealers with gaps on the forecourt, it does at least reduce the pressure on used values.
However, this does not guarantee stability in used values. 

Despite the current robust price performance in the market, trade buyers remain extremely cautious, with a majority of dealers researched by CAP expecting trade values to fall further. 

And the policy of automatically valuing vehicles behind book, while nothing new, is absolutely entrenched, according to evidence from dealer research that shows a sizeable majority hedging their risk in that way. 

Nonetheless, dealer sentiment is positive and there is a clear expectation among the majority of those researched by CAP that business will not decline significantly in the next few months. How much of this is dealers’ determination to remain positive is impossible to know.

The unexpectedly strong start to the year, in terms of used car trade and retail activity, has seen auction conversion rates for three-year-old ex-lease cars rise to the highest level since before the downturn began.

Late-plate cars have been performing above CAP in recent weeks, although this is partially driven by closed and manufacturer sales. 

Again 4x4s and superminis were the overall strongest performers during January which continues to support the view that off-roaders now remain at a price level which is sustaining the renewed demand. 

Leaving aside 4x4s, which are enjoying some stability only after an extended period of heavy decline, the rule of thumb for stimulating highest demand in the current market is low CO2. 

And the range that really stands out is Volkswagen BlueMotion, many examples of which have consistently been achieving premiums above CAP clean.