Reliance on trade-ins up

Time 8:53 am, October 11, 2012

DEALERS are increasingly relying on older, part-exchanged vehicles, says Manheim.

A look at monthly figures reveals that ‘the average age of dealer vehicles at auction has broken the 100 month mark for only the second time this year’, said a statement by the firm – showing dealers’ reliance on older vehicles to drive new sales is increasing.

The average selling price of dealer part-exchanges has risen over five per cent compared to August prices, too, with year-on-year values appreciating by 13.4 per cent.

Manheim’s ‘unique’ valuation figures – represented as a per centage of the car’s original price – confirm the strength of the market. ‘On a year-on-year basis’, said the firm, ‘not one of the vehicle segments in the analysis has seen a fall [in value]’.

‘There’s no doubt about it,’ said Daren Wiseman, valuation services manager at Manheim Auctions, ‘more dealers are having to “go vintage” and look at remarketing older cars to secure new sales.

‘The big question facing all motor retailers is; when will the market revert to “normality”, with predictable depreciation and seasonality returning to the market?

According to Wiseman, a change may not happen until well into next year.

‘As manufacturers focus their attentions on pushing more units into the UK market, basic economics says that this should start to ease the chronic shortage of new cars that has fuelled the phenomenon of used car inflation.

‘How long this will take to filter through to the consumer market is a tough call, but I would not be surprised if we saw prices at auction flatten off until 2013.’

Jon Reay's avatar

Staff Writer Jon is one of the Car Dealer team's newest members. You can also find him contributing to AOL Cars.

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