Used car market still hasn’t peaked
Although the auctions have been teeming with people this week – and our insiders have noticed the amount of private buyers increasing almost on a weekly basis – some vendors may not be achieving the reserves on all their cars. We have noticed several cars which seemed to be way off the pace, with little or no bidding on some models. With the guides now appearing to have peaked, it was certainly noticeable in some sales that buyers just weren’t prepared to pay the top dollar prices for everything but were, however, still paying a premium for the cherries!
The conversion rates have started to decline in many sales but the feeling is that cars with correct histories, all the paperwork in order and low mileage with good spec were selling easily, often and with multiple bidders. The ones that missed the boat in any of those departments were not achieving the same impressive prices.
Has the market in used cars peaked? We doubt it, every time someone has predicted that the market is at its highest it seems to continue growing and with the new car market currently still way down on last year and seemingly having found its level (unless what we’re hearing about the scrappage scheme blows everything out of the water) the 3 year cycle of used cars will be far less plentiful than it is right now. So, as a result, values of used cars will surely continue to hold firm although not making the spectacular rises we have seen so far this year.
Dealers, who currently market cars up to 3 yrs and 50k miles will probably, as a result of the future shortage of this kind of stock, will need to broaden their criteria and become more proficient at selling older perhaps higher mileage cars in future. This means more franchised, independents and supermarkets will all be vying for a foothold in the same market, which in turn should see that if customer negotiates a great deal on a new car today, the depreciation of that vehicle in 3 years time will be better than it has been for some time.
With many finance companies setting extremely cautious final guaranteed values on their PCP packages, there will also be plenty of equity in these cars leading to a buoyant business in future.
Well that’s the theory anyway.
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