Used car market pressure eases

AN INCREASE in the number of used cars coming into the market has “taken the edge off prices” and calmed some corners of the industry, according to used car pricing experts CAP.

A greater influx of part-exchange cars arriving at dealers is partly responsible, and with many franchised dealers focusing for the time being on selling those vehicles, competition to acquire stock on the open market has decreased.

CAP reports that the pressure has been lifted on some dealers who had become frustrated at how expensive it was becoming to source cars at fair prices.

However, the slight dip in used car prices is not expected to threaten the medium- to long-term stability of the market.

CAP’s Mike Hind said: “A year ago the increase in volume was much more of a cause for concern because it was largely driven by dealer self-registrations. This was due to severe weakness in the new car market and it meant a sudden and large influx of late plate cars into the market.

“This time more of the March new car sales represented genuine business and the fact that there are around 15,000 fewer 0-12 month old cars advertised for sale at present than a year ago is evidence for that.

“The dynamic in the trade market has clearly shifted from that of a few weeks ago when franchise and independent dealers were competing hard for every quality used car and consequently finding it difficult to maintain satisfactory profit per unit. Now the heat is off we are hearing reports that margins are improving for many.

“Franchised dealers are readjusting their used car profiles to focus back onto younger cars, which has led to something of a glut of 5-7 year old cars, offering much more choice in the marketplace for independents.

“Despite the general increase in volume, the fact that the majority of dealers tell us that their retail business is ranging from satisfactory to strong means we believe the medium term stability of market prices is not a major concern.”

By Press Association reporters