USED CAR MARKET BOUNCED BACK IN JANUARY

BCA’S LATEST Pulse report shows that average values rose in January following the disruption caused by the Arctic conditions and shorter trading period in December.

The volume of vehicles being traded also increased – not surprisingly very significantly when compared to December, but also by 10% year on year.

Vehicles from both the fleet & lease and part-exchange sectors recorded notable value improvements and part-exchange values reached record levels. This strong activity in the first month of the year should provide positive signs for the retail motor trade which is still finding the new car market difficult to stimulate.

Commenting on the news, BCA’s Communications Director Tony Gannon commented: “It is no real surprise to see values strengthen in January as the markets generally enjoy an uplift in activity following the extended Christmas break. This is typically sustained until the Easter period – which usually represents a watershed in demand.

“Anecdotally the retail motor trade has enjoyed a much better January, following a poor December when motorists simply could not get out to buy. Part-exchange sold volumes actually increased by over 88% in the month, a reflection of both a good January and a very lean December. And with new car sales remaining under pressure – down 11.5% to 128,811 last month compared with January 2010 - used car activity remains the best profit opportunity for most dealers.”

However, as Gannon warned, several factors are likely to combine to affect the market over the next 12 weeks or so. “While supply should remain constrained throughout February and the early weeks of March, it is likely that volumes will start to rise in late March following the plate change as de-fleeted and dealer part-exchange vehicles begin to hit the market.”

“Easter week itself is late in April and runs into the Royal Wedding Bank Holiday – effectively disrupting a full week of trading. Then there’s another Bank Holiday the following week! This is a particularly important consideration for volume sellers who should be planning their strategies now for that period, which could see demand slowing, just when volumes are rising.

“At the budget end of the market, there is likely to be continued demand from motorists who simply cannot afford to buy a more expensive car, but still need personal transport and need it quickly, because their current vehicle has become too expensive to repair or maintain.”

By By Press Association