Motor Industry News
November 2011 Used Market Editorial
- Car values down 3% and falling
- LCV values up 2% - market stable
- Bike values down – insurance concerns
As we near the start of winter, the used market is becoming an ever more challenging environment to be in. The last month has seen sales rates drop off significantly across both the volume and prestige markets. There are a number of factors to take into account when trying to justify the reasons for this.
- The increased new car sales activity of September spills over into October creating what can be perceived as an artificially buoyant month for trade activity. This tails off very quickly and fuels the downturn in the market.
- A lot of part exchange vehicles are still sat around unsold as we move into November which limits re stocking.
- Buyers are now starting to focus on the imminent festive season which historically restricts spending towards the latter part of the year.
The auction halls are certainly a lot quieter than only 4 or 5 weeks ago. The lack of buyers and bids has certainly not gone unnoticed by dealer groups who use the auctions for trade disposals. They are now being very cautious once again when valuing a non-retail part exchange in order to get their money back at auction. Cars that are sub £2000 with a long MOT and in above average condition seem relatively unaffected by the slowing market. They are still viewed as ‘disposable motoring’. Nearly new Corsa, Fiesta, Astra and Focus along with mid-size MPV’s are still selling but at a reduced price when compared to only a few weeks ago. Ready to Retail condition is the key. Anything in need of paintwork or preparation over and above a valet either isn’t selling, or attracting low bids. The prestige models over £15000 such as 5 series and A6 have slowed along with the trend. These models remain very specification and colour sensitive and must be in tip top condition to achieve bids.
As usual at this time of year the 4x4 market starts to behave in a different way altogether. Now is the time that buyers start to remember the grim winters of the last 2 years. Retailers and traders are now wise to this. Many are stocking up on 4x4’s ready for the increased retail buying activity that usually kicks off in early December. Some dealers, particularly in the Land Rover network have actually started to increase their used car retail prices in anticipation of the bad weather sales. Historically most Land Rover dealers have been wiped out of their used stock within days of the bad weather hitting.
Almost a mirror image of the 4x4 sales trends are convertibles. Another example of a seasonal vehicle and their prices and sale rates reflect this. The trade are desperately trying to move any over age stock left from the back end of summer, and used values are at an annual low at this time of year. As usual prices will pick up towards spring and there are they certainly represent good value if thinking ahead to next year right now.
One area of the market that has plateaued is the big engine sports variants of some prestige brands. A great example is a 4 year old low mileage (sub 30000miles) BMW M3. These are now changing hands around £21000 to £22000 in the trade. Other examples are Audi’s RS4 and Mercedes C63AMG, all well over £50000 new and very good value for money as a used car if you don’t mind whopping running costs. They are around in limited numbers but the demand is there for them. These cars will hover around their current values for many months to come as the previous incarnations continue to perform well amongst the enthusiast buyers with tighter purse strings which, in turn supports the later cars values.
Throughout the remainder of 2011 we predict an average drop in the used car market of around 8% due to the usual season factors. For November we have dropped prices by 3 to 4% on average. Obviously 4x4 values have remained consistent due to the imminent rise in demand.
As we enter November the demand for good quality used stock is ever increasing. The SMMT reported that the new UK Van Market has grown by 9% so far this year. The lack of good used stock and increasingly attractive manufacturer backed contract hire packages are certain to have driven some buyers to buy new.
Stock is going to become increasingly scarce as we approach the latter part of the year. This will continue into the early part of next year. Even vans with bodywork damage and high miles are finding trade buyers in a desperate search for stock.
Smaller vans such as Fiesta, Corsa and the larger Berlingo and Transit Connect are all top performers, although long wheelbase 75BHP versions of Connect should be bought with caution. Late model Scudo, Expert and Dispatch are the pick of the bunch in the medium van sector. Service history, low mileage and a healthy amount of remaining warranty ensure top values.
Larger vans are performing no differently to the smaller variants. Crafter is as strong as ever and becoming increasing difficult to buy in a Ready to Retail condition at the right price. In recent months we have seen high volumes of Vivaro passing through the auctions. The numbers now appear to have decreased and as such values are strengthening. Sprinter and Transit remain a popular choice in the trade but there are some very tired examples around. In order to attract buyers, service history is a must especially if the mileage is high. Ready to retail Tippers and Luton bodied large vans are thin on the ground and the values are strong as a result.
Late model Navara and L200 are still attracting top money. Double cab models with plenty of ‘car like’ accessories such as Leather and Satellite Navigation are top of the list on these fashionable pickups. Plenty are also being targeted for export.
As a result of the strong demand across the board we have increased our values for November by 2%.
As usual at this time of year, retail demand has started to dwindle. Whilst enquiry rates and footfall have certainly dropped, the unexpected warm spell of a few weeks created surprisingly good sales activity.
A rare bike or an outstanding low mileage example of a common machine offers the strongest profit opportunity. These examples are being targeted by buyers who are exporting them. This is further contributing to the ‘black hole’ that is growing the UK used bike market. Many traders have noted that there is real evidence now of the shortage of good clean used stock in the £2500-4500 price range. There is however an abundance of less than perfect high mileage examples which are undesirable. With fewer new bikes being registered, this situation is only going to get worse.
All traders are expressing concerns about late model used Sports bikes, with pricing becoming an increasingly complex decision based on the number of low mile Dealer Demonstrators available as well as low priced genuine used bikes under 3 years old. Despite many manufacturers offering finance and accessory incentives, buyers are attracted by late, low mileage and immaculate bikes that save them thousands on list price.
Looking at the New Bike Registration statistics, they clearly highlight where the market has shifted in the last twelve months. The total PTW (Powered Two Wheelers) market is running just behind 2010 with a fall of 2.10%. The Scooter sector has seen a growth of more than 20%! This is evident when looking at individual manufacturer performances. All the traditional big names are experiencing sharp declines, whilst names such as Lexmoto, Pulse, Sym and Peugeot are all posting growth figures. Triumph has had a comparatively good year and this is obviously reflected in the positive figure in the Adventure market. KTM are also in the Black, partly due to their exciting 125 model.
And here is the growing concern. All accept that there has been increased demand for 125cc machines, both new and used. This may be Scooters or 125cc budget geared machines. However on the back of this good news, comes the realisation that insurance quotes for this sector are increasing at an alarming rate. A typical 125cc quote for a 17-20 year old has shot up and this is also being reflected in first time riders over 21. With increased focus on fuel costs and the squeeze on personal finances the last thing needed is a negative in what has been a growing good news story with real evidence that people have been opting for two wheels in an effort to save money and improve their daily commute.
Naturally values have eased again this month, although the above is taken into account. People are still looking to buy in the trade although all are taking an increasingly cautious view.
25th October 2011
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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