A RECORD rise in used car trade prices has been reported in the April edition of CAP Black Book.
For many years April has historically seen a typical 2% reduction in trade values but this year values are increased across all 05 to 08 plates by an average 5%.
For 3 year old cars the average increase is closer to 6%, representing an 8% better performance in the open market than would usually be expected.
The market’s remarkable performance during the first 3 months of 2009 has seen used cars claw back much of the additional depreciation suffered during the unprecedented downturn of 2008.
Black Book values are now closer to those published as long ago as November after 3 months of concentrated buying activity by dealers who had run stocks down toward the end of last year.
A general shortage of used stock has been instrumental in repairing some of the damage inflicted last year when confidence suddenly vaporised after Easter, leaving used values in freefall for the rest of the year.
Late plate cars are enjoying a particular resurgence, due to the dismal performance of the new car market which means fewer cars being registered to meet volume bonus targets, which would normally be fed straight into the used market.
CAP believes the market has undergone a significant correction since the downturn. This view is supported by the fact that sector performance has been reversed in comparison with last year. For example, the hardest hit sector during 2008 was 4x4s, many of which saw up to 50% wiped off their trade value. But this year’s upward charge has been consistently led by off-roaders, proving that a strong market still exists for such vehicles provided taxation and fuel costs are not seen as prohibitive by consumers.
Conversely, Superminis and City Cars, which were the only consistent performers during the downturn have seen relatively modest increases in value during 2009.
CAP also believes price rises are slowing as the market becomes less volatile.
Black Book’s Mark Bulmer said: “We are now expecting the market to stabilise over the next few weeks and there is already evidence to support such a view. Despite the clamour for stock, dealers are now reporting reduced showroom traffic and fewer retail sales. This will lead to reduced buying activity although large dealer groups are likely to stay in the market to buy in volume for a while yet.
“This is because many have been unable to replenish stock during the first quarter that was deliberately depleted for financial reporting and risk mitigation reasons at the end of 2008. There is also some evidence that auction conversion rates are beginning to reduce. We believe that in general buying activity will reach a more stable level during April.”
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