Wholesale used car prices rose by 0.5% month-on-month in February as car retailers continued to express their concerns about margin compression, Cox Automotive reported.

The group’s Manheim physical auctions network recorded an average selling price of £6,131, up 0.5% month-on-month as ex-fleet car values increased by 4.9% month-on-month.

Meanwhile, the average value for part-exchange vehicles fell by £300 to £4,082.

Cox’s wholesale stock funding business, NextGear Capital, recorded an average cost per unit of £7,568, down 1% month-on-month as average mileage increased slightly to 62,482.

Dealer-Auction.com reported that the average selling price remained on par with January at £5,017.

The trade-to-trade online auction platform also recorded an 8% year-on-year increase in average values, however this is likely to be the result of a change in stock mix, Cox said.

Philip Nothard, Cox Automotive’s customer insight and strategy director, said: “The wholesale market remained buoyant in February, with strong buyer interest and good auction conversion rates.

“Interest in retail-ready vehicles remained high, and cars at Grade 1 and 2 regularly achieved the CAP Clean value. On the other side of the coin, vehicles in poor condition and those offered without a V5 attracted low levels of buyer interest.

“Vehicle condition could, in part, explain the price trends we’ve reported for fleet vehicles, which tend to be offered at a consistently high standard.”

“Looking ahead to March, vehicle condition and documentation will become more important as buyers look to achieve a quick return on their investment.”

In retail, February results published by the SMMT showed that new cars registrations rose 1.4% following the January dip, while the impact of WLTP, ULEZ and legislation changes around diesel vehicles continue to influence the fuel landscape.

A recent dealer sentiment survey from Modix, Cox Automotive’s digital marketing specialist, suggested that February had been a positive month for many dealers.

Two-thirds of respondents reported an increase in footfall and online activity compared to the same period last year, while 71% confirmed they had seen increased demand.

Despite the broadly positive picture, the survey highlighted some concerns around margin compression, as 67% of dealers indicated a decline compared to 2018.

Nothard said: “On the whole it’s a positive picture as the used market continues to perform well, whilst new car sales have had a solid start to 2019.”

“In addition to concerns around margin compression, the biggest hurdle seems to be WLTP, with many dealers expressing frustration over its impact on company car tax (BIK) bands.

“Six months on, increased tax costs are still affecting sales of some new models. While the consultation between the industry and the Government continues, this is having a negative impact on an already fragile new car market.”