Following a fall in values in the last quarter of 2013, the market is beginning to show signs of increasing strength so far this year.
According to Black Book Live, CAP’s unique real-time guide to used car values, demand is growing fast for the best-quality cars.
However, CAP experts warn that the number of cars in circulation which are in average and poor condition, is also on the up.
That means that dealers who failed to acquire stock of sufficient quality when prices were low in November and December, will now have to work harder to fill their forecourt.
For dealers, the biggest challenge over the next few weeks will be protecting profit margins in a rising wholesale market, say CAP. But the good news is that in the current market, motorists are likely to be trading in vehicles of higher quality.
Derren Martin, senior editor of Black Book Live, said: ‘In a market like this, dealers are always faced with difficult choices. Lower quality stock is abundant and affordable, but will attract significant refurbishment costs and take time to prepare for retail. The best cars will inevitably cost more in the first place, so dealers may have to price them at a premium on the forecourt.’
He added: ‘The biggest winners will probably be motorists with a well-maintained, low-mileage car to sell or swap, because dealers will undoubtedly be very keen to do a deal if they see the chance of a strong profit opportunity from the trade-in.’