ANY hopes of a stable used car market during early 2013 are set to be dashed, according to CAP.
The culprit isn’t the economy, nor the quality of used vehicles – but a simple issue of supply and demand.
‘Sustainability… will almost certainly be undermined by the on-going level of pre-registration activity,’ says CAP, ‘as manufacturers continue to drive new car volume in the UK.’
In effect, says CAP, the market will become saturated with ‘nearly new’ cars – colliding with the current lack of ‘quality’, retainable vehicles to lower prices as supply catches up with demand.
The firm’s Black Book Live software has followed the year’s used car market trends – currently ‘flooded’ with older, ex-fleet vehicles that require a great deal of dealer preparation. It was initially thought that this trend would continue into 2013 – keeping prices for instantly-retailable cars high – but CAP is now suggesting that this may not be the case.
‘While we continue to expect prices to rise into January we are no longer as confident as we were that values will continue to increase into the summer, said CAP’s Mike Hind.
‘This may be good news for hard-pressed dealers, but fleet and contract hire disposers – and anyone else selling their cars into the trade – need to be aware that the on-going level of pre-registration activity will inevitably impact throughout the market.
‘To put it in plain language, we are fast approaching the point where there is nowhere for late plate values to go without forcing a reduction further down the age bands.’
CAP say they’re not being alarmist though – and that there is still a place for pre-reg. ‘Our view is that manageable levels of pre-registration are a perfectly sensible approach to car retail,’ says Hind.
‘Not only does it keep people in work throughout the new car supply chain, but provides consumers with genuine value for money choices. But we do believe that price stability is desirable because it makes trading for everybody much smoother and enables a much clearer view of risk for all the businesses, from contract hire operators to insurers and banks, who are exposed to it.’
