7:31 pm, July 27, 2011
BCA has released data on used car market performance at the half-year point – and it’s a steady picture.
The firm’s report shows that the used car markets are relatively steady despite the ongoing economic gloom and concerns from many parts of the UK retail sector.
It follows the latest SMMT new car forecast – revised in July – that suggests a five per cent decrease in new car volumes year-on-year, underlining some of the difficulties associated with the post-scrappage marketplace.
Despite this, BCA’s half-year data suggests that average prices across all used car sectors have been stable for the past 18 months. Values for fleet cars were actually higher in the first half of 2011 than those recorded when the market was accelerating in 2009.
In spite of the continuing economic pressures, the average value of a used car has barely moved over the past 18 months. In the first half of 2011, the figure was £5,802, equivalent to a £47 decline from H2 10, while year-on-year values are just £32 behind H1 2010.
In value terms, the last 18 months demonstrate stable market conditions, with no sign of the peaks and troughs experienced in 2008 and 2009.
That’s not to say there are no changes afoot however, says the auction firm. Looking at the half year averages, the age of cars sold has been rising since the back end of 2008 and went above 61 months for the first time on record in 2011.
Average mileage has also been rising over time and nearly reached 59K in the first half of this year, another market highpoint.
There appears to be a general move towards cars being older and higher mileage when they are sold in the wholesale arena. This would suggest whoever owns and operates a car – motorist, commercial organisation, leasing company – they are keeping it and using it for a longer period before it is sold.
In fact, BCA suggests this may become a fact of life for the used market over the next two or three years, as the available car parc becomes ‘older’, due to the lower numbers of new cars being sold.
BCA says quarterly data is also revealing. With the difficult start Q2 11 endured with multiple Bank Holidays in April, the final analysis shows average values fell by 3.4 per cent compared to Q1.
Unsurprisingly, average used car sold values fell in April, as buyer confidence was fragile and demand slowed due to the combination of the late Easter, the Royal nuptials and the hottest April on record.
The markets recovered in May and average values rose, but by June an element of seasonality saw average used car sold values declining again.
Average quarterly values are now at their lowest since Q1 2009 and are broadly on a par with those recorded just before the onset of the ‘credit crunch’ in 2008.
This suggests the next quarter figures could provide a good indication of where the market dynamics are going – a climb might indicate the used market is following seasonal patterns whereas another fall would set a quite worrying precedent of decline.
