Used car values rose in December on lower volumes

December’s used car wholesale market saw a lift in values, but a drop in volumes, according to the National Association of Motor Auctions (NAMA).

The average value of all the cars sold rose 10.4% month-on-month to £5,975, as the average age and mileage of stock sold improved slightly. In particular, the percentage of vehicles under 2.5 years old grew at the expense of older stock, NAMA said.

The average conversion rate increased slightly since November to 75%, level with December 2012, although the sub-2.5-year-old cars were in slightly less demand.

Justin Lane, NAMA chairman, said: “As anticipated, retail demand in December was slow, with buyers returning to the market in the final days running up to Christmas. Many dealers also reported frantic activity in the period leading up to the end of the holiday break in early January.

“From this point, a strong level of retail demand is expected to last through to the end of the month, giving a good start to the year for used car sales.” Nevertheless, Lane said, the shortage of stock caused by suspended de-fleet operations over Christmas has meant values have been inflated for a short time. He expected this to settle once the contract hire sector returned to normal.

NAMA said ex-fleet premium SUVs and lifestyle 4x4s were continuing their climb in price.

Trade-in disposal

The UK’s largest motor auction group, BCA, reported that its average value for dealer part-exchanges in December fell by £15, or 0.4%, to £3,842. Year-on-year December values were ahead by £278, or 7.8%.

The average age of part-exchanges was marginally greater than a year ago at 88.4 months.

At Manheim’s auction rooms, the average part-exchange value for December fell just 1%, or £33, month-on-month to £3,129. Year-on-year, the average value was up 9.1%, or £278, despite average age increasing from 98 months to 100 months.

BCA’s UK operations director Simon Henstock said: “The markets remained very active in December, despite the shortage of stock.” BCA suggested that some dealers were retaining quality part-exchanges to retail in the New Year.

Daren Wiseman, valuations services manager at Manheim Auctions, said: “December’s figures show a surprisingly strong used car market, especially when compared with the tough times still being seen on many high streets. Clearly, dealers learnt their lessons well in the past couple of years and have become much more selective about which models they remarket via auction, which means prices are remaining strong.”

Values of all 10 vehicle segments rose during 2013, most notably for coupés, which increased by £903 year-on-year to £5,141.

Retail stock acquisition

Manheim’s Market Analysis for December showed the average selling price of ex-fleet vehicles dropped month-on-month by £798, or 10.6%, to £6,795. However, the average was still 2.7% higher year-on-year.

Manheim’s Wiseman said the past 12 months had been fairly good for leasing companies looking to gain best value for their de-fleet stock.

“It has largely been a seller’s market and residual values have been strong,” he said.

Wiseman said all the indicators pointed to another good year for vendors in 2014, which meant dealers’ costs of acquiring forecourt-ready stock were unlikely to fall.

Manheim found values increased for seven of the 10 vehicle segments in 2013.

BCA’s Pulse report shows the average value of its ex-fleet vehicles in December fell 1.5% or £139 from November’s record of £9,301. The £9,162 December average is still 7.6%, or £653, ahead year-on-year however.  

BCA’s Henstock said: “Looking ahead to 2014, there are no signs that the demand for retail quality used cars is going to ebb, so we expect values to remain strong. If the economy continues to improve, increasing retail demand could mean even more competition for stock.”