Motor Industry News
DOES CHRISTMAS SPELL DOOM AND GLOOM?
It’s Christmas shopping time again. Traditionally this is a quiet time for the motor trade. Retail buyers are searching for the perfect gift not the perfect car. So, is that it? Nobody is buying in retail circles and as a consequence the trade is inactive? This year it’s not the case.
In an ever transparent market some buyers have realised that now’s the time to grab a bargain. There are some great used car deals to be had at this time of year. Traders who bought at the right price over the last couple of months can sell them very competitively.
Dealer groups and smart traders are actively out buying ready for next year as the market strengthens into January. Buying right now ensures a head start for 2012. There’s plenty of time to get cars prepared, ready for sale and a healthy profit waiting.
The festive season usually brings with it bad feeling in the motor trade. 2011 has shaped up differently. The trade seem to have re focussed their attention into preparing for December by buying right for the retail demand on the lead up. Combined with ambitions and forward thinking for 2012, this December looks like it will have a positive feel to it.
TOP OF THE CHRISTMAS LIST
The auction halls are ticking over well, but are showing a lack of ready to retail 2 to 4 year old prime stock cars. Golf diesel variants, particularly in GT spec are great examples. Prices remain strong across the board at this age. Condition, full service history and low mileage are the key to top bids.
Late Ex daily rental cars such as Corsa, Astra and Focus are still performing well as they offer a safe profit opportunity. They are an ideal backbone to any large stock dealer.
C-max, Zafira and their competition are still in demand but they must be looked after. They are becoming more difficult to find in ready to retail condition which is keeping values buoyant.
It’s very much the same story with prestige stock at the moment. There are plenty of unloved examples of 3 and 5 series, A4 and A6 sat waiting to be snapped up. They’re either not selling or just not making anywhere near the right money for the seller. Any of these cars in tip top condition with an immaculate service history will make Ready to Retail money.
Most diesel 4x4’s up to 6 years old are performing well. Last month we mentioned that the 4x4 market had started taking centre stage ready for the bad weather buyers. As yet there has been no snow but the wise traders who have stocked up in anticipation have already been feeling the benefits. Additional interest and profits are already being enjoyed! These two factors and trade demand will only continue to grow as the inclement weather potential increases.
BOTTOM OF THE LIST
This month values haven’t dropped as much as it was first thought. Diesel 4x4s remain untouched. Everything else has seen a dip of around 1%. However there is one sector that has experienced difficult times again and seen a 4% drop. These are older cars at 5 years plus such as Mondeo, Insignia and Avensis to name a few. Well out of warranty and expensive to run they aren’t going to be on anyone’s Christmas list.
The LCV market is going to have a strong finish to the year. There is however some uncertainty as we approach 2012.
Stock and Retail demand are the key driving force in the market at the moment. We said last month that stock would be in short supply towards the end of the year. Some traders have seen this as a golden opportunity to sell stock whilst prices are strong and get some cash in the bank.
Older vans in the south will start to drift to the scrap yard or even up North due to London become ever ‘green’. A Euro II Van will cost the owner a £100 per day to drive into the capital as of January. A recent survey done by the BVRLA shows that 59% of 10 year old vans failed an MOT. Only 9 % were retested. This suggests that owners put them in for test to see if they are worth keeping. Time’s up for the older van as other cities look at some form of Low Emission Zones. A new van today has a much shorter lifecycle than only a few years ago.
Small vans are still in short supply and finding trade buyers. Corsa van is around in volume and any distress selling for year-end will affect the value. New shape Fiesta 1.4 TCDI is very sought after. Don’t be afraid to buy the odd petrol van, the low volumes mean that they will usually find a buyer. There are plenty of newer Berlingos in the market. Values will fall if the volume continues. New shape Kangoo is starting to filter through and the long wheelbase model is proving popular with buyers
Nissans Primastar has started to hit the market in some volume and is justifying its premium over Vivaro. Mercedes Vito has to have the right specification to get any interest. We have seen some Transporters in an odd Colour that did well into Ready to Retail Money, but be careful with T5’s as the volume is knocking the values. We have reduced normal model T5’s by 2%. Sportline has seen an increase of 2%.
There are a good number of large vans available this month. Condition is the key to getting a quick sale. Sprinter is still holding onto its value but with so many appearing, their values will fall. A nice 2005 model Transit could make as much as a new shape 2006 model as the trade are still refusing to take the new technology on board. The star of the show is the New shape Renault Master at the moment. Buyers are snapping them up with strong bids.
4x4’s are benefitting from the upcoming threat of bad weather. Values are very strong if the spec is right. Amarok is the pick of the bunch, achieving over list in some cases. Our values have been adjusted accordingly.
Overall most values have been untouched for December although 4x4s have seen a 2% increase as a whole.
The Two Wheel market is becoming an increasingly difficult one to report upon, let alone continue to trade successfully! As a real positive, the NEC Motorcycle Live Show closed on a positive with an increased attendance- up 14% on last year, and hailed as a proper showcase for the Industry again.
The complexity comes when looking at new bike sales against demand for Used. How can a dealer successfully negotiate his way through the minefield of balancing the books whilst also keeping the right level and mix of stock, at the right price and keep the stock moving.
The new bike market looks likely to struggle to just over 90,000 units for the year, but with the well documented shifts in demand for styles of bikes. The Japanese marks have seen sharp decline in market share, apart from Honda who are perhaps benefiting from their solus franchise decisions, and from arguably their best model line-up for years with real strength in depth.
The European brands have seen increases in market share with Triumph, Ducati and KTM all benefiting from the shift away from Sports bikes. However, BMW are struggling even with their varied model range. This is partially due to their success last year in the sports sector. One dealer recently noted that he struggled to get a firm bid on a used S1000 RR due to the excess availability both new and used in the trade. Then we have seen massive increases in market share for the emerging Chinese lightweight product, a positive factor which cannot be overlooked.
We’ve started to see the first signs of casualties and a greater number of dealers questioning the direction of their business and franchise in terms of stocking. High value Sports bikes are an unbearable strain on their finances.
Demand is slowing as we head through winter. There is said to be a noticeable shortage of used stock and this could become an issue early next year as demand increases. Dealers have noted that enquiry rates are down for the level of stock being offered. As one dealer explained, people are deciding to sit on their existing bike, as in keep it until next year. Rather than sell now and buy again next year. The price to change is too great, the message has been accepted that the newer bike is unlikely to offer any greater experience than their existing one so why bother. In addition, a fair number of used bikes are still filtering out of the country to European buyers, all of which is adding to the black hole which is looming.
Values have been reduced for this month, and fairly heavily on late plate sports bikes. This is prompted by the significant reduction in list price from the like of Yamaha, and the knowledge that wholesale deals have been done, allied to the reluctance to buy due to financial constraints on the trade.
The concern has to be that for those dealers who do not bite the bullet and look to buy used stock now. They may be looking at empty showrooms early next year as the supply dries up. It’s a brave decision either way.
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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