Motor Industry News
September started with its usual buoyant and upbeat feel caused by the increased demand created by the new ‘61’ plate. Historically the trade starts to boom into September and this trend carries over into at least the middle of October. Throughout August we saw sales figures steadily rising and the trend has certainly continued throughout September.
September accounts for around 17% of all new car registrations throughout the year and along with March receives a huge amount of focus from retailers and the fleet market. This in turn creates some great used car opportunities with plenty of fresh stock appearing in the market place.
The fleet market is performing very well in terms of new registration numbers in 2011. Some manufacturers have recognised this opportunity and are having a real push in the fleet segment. Volvo for example have realised that success within the fleet market is reliant on two major factors. These are having a stylish and desirable model range and, perhaps equally important, the need for a low C02 range that will appeal to companies and end users budgets.
The auction halls have remained busy throughout September. The new auction condition grading system that is being used by some auction companies appears to have built up some confidence when it comes to buying at auction, particularly with online buyers. Some dealer groups have been actively buying after a good used car sales performance over the last few months. New vehicle part exchanges have simply not filled the forecourts due to the demand. Most late, clean low mileage examples of any mainstream and prestige models are still creating a lot of demand. Ex daily rental cars are prime pickings such as Corsa, Focus and some of the Korean competition. They offer an easy and quick turn around and are usually a ‘safe buy’ as they are still under manufacturer warranty. Independent dealers are paying plenty of money for anything that is 6 to 18 months old. This is happening to a larger degree in the prestige market, yet they can still sell them for less than the main dealers and return more profit in some cases. This is due to their reduced overheads and the lack of a costly used car preparation bill being attached to each vehicle.
Within the prestige market, some manufacturers have laid down substantial penalties to any UK dealer who offers to export a new car to another market. The state of the pound has generated lots of interest from abroad, particularly from the Far East. With dealers now struggling to meet this demand due to the manufacturers clamping down, foreign buyers are looking at late low mileage primarily VAT qualifying vehicles due to the lack of new car supply from the UK dealers. This has caused a real increase in the demand for particularly petrol engine prestige models, which are the model of choice in some other markets. As a consequence some petrol models such as Mercedes C and E Class, BMW X5, Range Rover and Porsche Cayenne are achieving almost diesel prices in the trade.
The Fiesta remains ever popular and is still a best seller as a new car. This is reflected in its used car performance. Traders want them on their forecourts and will pay strong money for a nice example at auction. Mid-size MPV’s are still in demand with C-Max, Zafira and Scenic attracting plenty of activity. Values on these have fallen quite steeply over the past 12 months and they now look like a lot of car for money.
The seasonal cabriolet market is following its usual trend, but demand has dwindled particularly over the last month. There are now so many models to choose from and this has put values under pressure throughout the summer months. The volume manufacturers have all had a slice of this market with models such as Megane Cabriolet and 308 CC. This applies particularly to anything over 3 years old that is out of manufacturer warranty. As such, values of models such as the A4 cabriolet and the 3 Series Convertible have dipped accordingly by around 3 to 4 percent.
Throughout October we expect to see the market calm down after the September activity has tailed off. We have dropped VIPDATA values by an average of 2 to 4%. There are some new models that will be unaffected by this drop. These are the current Star performers such as the Range Rover Evoque which will currently make at least new price if one hits the market as a used car.
The stock shortage is starting to show now with some auctions over and done with a good hour before they would be normally end. Prices are very steady at the moment with late low mileage stock finding buyers the first time they are offered. Vendors are confident that should the van not sell first time round, they will hold back and offer it again in another sale.
There are plenty of small vans such as Kangoo and new Berlingo available in the market, but due to ther shortage of overall stock, prices are not being affected too much, VW Caddy new model values are very firm and we have increased the values on them by 5% this month . Plenty of Ford Transit Connect vans are around but again values are remaining steady.
We are now seeing a number of new model VW Transporter’s hit the market. Those with service history that require no work are achieving RTR figures, those without history and in need of preparation are selling at trade price, Renault Traffic is performing in the same manner providing it’s in a factory colour, There are some old LDV Pilots 6 Seaters around and these are creating plenty of interest.
Sprinter is still king of the pile amongst large vans. We have lifted values again this month by 7% on LWB models, they have to be very tidy to get to RTR value, but always make at least Trade money, Transit LWB van’s are around in volume but almost all of them are finding homes, and as with the Pilots some LDV Convoys with Gas conversions are again getting some interest but most of these were at a southern auction.
We have included New Euro V Ford Transit values in this month’s product. The values have seen a lift of around £500 over the outgoing model, Daylight Running Lights and Silver grill the only obvious visual changes.
Clearly we are now into the quieter period of the year and as showroom traffic begins to tail off, then the serious issue of cash flow is going to bite over the next few months. Though today’s market is so fickle, that making any definitive decisions can easily catch you out. The balancing act of keeping the ‘right’ level of used stock on the floor to supply demand against being forced to de-stock at stand-in or below, just to see some revenue turn is an increasingly difficult decision. It is true to say that there are no particular bankers’ anymore. We have heard numerous anecdotes of a bike which has stood un-noticed for weeks, finally attracting a customer - only to be followed quickly by another customer who contacts you to buy the same bike. The dilemma being that replacing that particular machine could well see the replacement standing un-noticed again for an even longer period. It is a national marketplace today and you are competing against dealers from the top to the bottom of the country. Buyers are scouring the internet looking for the best available for their money, comparing mileage, history and price.
Whilst values have naturally been dropped this month, reflecting trade bids and demand, it may be worth considering the wider view. Where we have seen new motorcycle sales levels fall consistently over recent years, we have also seen a continual flow of late model used stock moving out of the country. It is fair to assume that at some point, this ‘hole’ in the used marketplace, is going to have a real effect on availability. Obviously the above mentioned cash flow may be the stumbling block, but actively buying over the coming months could well pay dividends once the market picks up again at the start of next season.
Keeping your head above water may be the most pressing issue at the moment, but those in the enviable position of having free-funds would be advised to stockpile now awaiting the start of the new season.
VIPDATA is part of CDL Vehicle Information Services Ltd (CDL VIS) the vehicle data arm of CDL Group Holdings Ltd, based in Stockport, Cheshire. www.cdl.co.uk
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