The supply of used cars into the wholesale auction market should start to pick up in the next three months.

Roger Woodward, managing director of online remarketing company, CD Auction Group believes the market will be driven by retail consumers taking advantage of outstanding deals on new cars during the March plate-change at the same time as more fleet businesses refresh their company cars.

But, he says, the overall picture is still one of a shortage of good quality stock; as a result, values achieved at auction are likely to remain high. Vendors will benefit from good residual values (for the right cars) while dealerships should take advantage of the stable market to maintain margins.

Looking ahead to the March plate change and beyond, Woodward said: “We would expect numbers to pick up towards the end of March and through into April.

“Dealers tell us there are a lot of incentives on the table to attract retail customers with part-exchanges. Meanwhile growing business confidence - and high residual values - means more fleets are thinking about change.

“New registrations to fleets in the first half of 2011 were up by 3.4% and those cars should now be reaching the end of their business life. They are the core of the used car market.”

Commenting on the first two months of the year, he said: “As we predicted, supply has been tight but so has demand.

Professional buyers remain choosy about what they bid for but they are prepared to pay good money for the right vehicles. Cars that sell are generally fetching well over guide-book values.”

The broadly stable market conditions are likely to continue until the car manufacturers ease back on new car incentives which could boost used car demand.

But supply will remain constrained for the rest of this year as new fleet registrations in 2011 grew by only 4.7%.