Motor Industry News
The month that marked the start of the 11 plate is over. The trade appears to be frustrated for a number of reasons. Supply restrictions from mainly premium manufacturers have frustrated a lot of dealers who would potentially have had their best month in terms of new car registrations for a long time. Retail buyers don’t seem to mind the wait though, it seems to put a psychological financial barrier between now and a more stable outlook. They are waiting for up to eight months for a ‘run of the mill’ hatchback in some cases.
The lack of supply had merely spread the delivery of new vehicles out rather than stopped the cars selling. The buyers who don’t want to wait are paying very close to list price for many six to twelve month old used cars. This is keeping nearly new values of certain models such as VW Golf, Audi Q5 and BMW X3 artificially high.
Elsewhere in the market the ever rising fuel costs are starting to affect bigger engined cars and this trend is creeping into the larger 4x4 market. There appears to be more and more Audi Q7, BMW X5 and Range Rovers appearing as used vehicles where perhaps people have downsized in an attempt to cut back significantly on running costs. Even with the recent 1p per litre price cut on fuel the supplying companies have managed to mask the reduction amongst various price hikes. Fuel prices look set to continue rising which will surely make buyers far more frugal and they will certainly think twice before opting for a large engine.
The current supply issues throughout the industry may only be the start of things to come due to the recent Japanese disaster. This isn’t just going to be an acute problem with Japanese car production. Many European and American manufacturers rely solely on Japanese factories for vital parts for their production lines. With some marques already feeling severe disruption, engine production has already been affected and in some cases has shut down the lines altogether. This is mainly due to the lack of specialist components such as lambda sensors and is set to have a knock on effect that could have dire consequences on vehicle lead times. Late registered used examples could be about to have an unexpected value boost as a result.
The used car market has started to slow. Dealers and traders are full of stock due to March part exchanges and this is showing in the auction halls. The dealer group buyers are not out in force as they were towards the early part of the year. Even large franchises are now happier to retail the older, cleaner stock which has been previously banished to auction. Anything that has service history and is generally a clean car even with up to average mileage can be seen as part of an approved used car scheme on a forecourt. The profit margins are generally larger on the older cars up to 7 years old, and the shift seems to have come since late, low mileage stock is still demanding very high prices therefore making profit margins very slim. As a result of dealers being over stocked at the moment, there are some good clean cars hitting the auction halls and being offered direct to the trade via other routes. It’s just a case of hunting the good ones out, not an easy task.
Following our extensive research we have kept values of certain models as they were in March as the market has stayed particularly buoyant for them. These include Audi Q5 and BMW X3 which are still proving ever popular. Due to the recent influx of part exchange vehicles and overstocked auction halls we have lowered prices on most other vehicles by between 1 and 4 per cent, with larger engined vehicles being particularly affected.
March saw a lot of fresh stock of all varieties hitting the market. This is mainly due to fleets and traders replacing their current vehicles. There is plenty of choice out there and the clean variants without really high mileage will keep selling well and for a good premium over the really high mileage damaged vans which are widespread. There appears to be an abundance of ex parcel delivery Mercedes Sprinters hitting the market at the moment which could have a negative effect on used values if they start flooding the market.
Values for April have continued at much the same pace as March with the usual trends. A good clean van from most manufacturers without really high mileage will both sell more quickly and make a substantial premium over a van that has had a hard life.