AM used market insight - April 2009
Mike Hind, Communications Manager, CAP
The used car market revival of 2009 is now believed to be slowing.
Three months of spectacular gains - culminating in a record average rise across all plates in the April edition of Black Book - have seen values recover to something closer to levels seen in October/November of last year.
Evidence now suggests that the frenetic edge to buying activity began to slow during the early part of April. It is worth noting that Black Book researchers during the latter part of March were detecting an element of ‘beat the book rise’ in much of the buying activity they witnessed. And what they were beating was indeed a major increase. In the case of 3 year old cars, historically the April book has seen a 2% decline in values. This time there was a 6% rise, making it an overall improved performance on the ‘norm’ for that time of year of 8%.
One of the most interesting aspects of the upturn seen during the first quarter of 2009 is that it clearly demonstrates the quality of a market correction rather than any fundamental change in the economic dynamic of the market. The evidence for this is in the way cars which were hardest hit during the 2008 downturn this year led the revival in fortunes. In a direct reversal of last year’s trend, small cars such as City Cars and Superminis saw the most muted rises, while some previously hard-pressed 4x4s and Executive models saw increases well into double figures.
If would be difficult to find a clearer example of a market ‘bounce’ following sustained falls. In simple terms it was generally the vehicles which had the most ground to claw back which enjoyed the strongest rises while those which had retained some price stability throughout 2008 remained ‘steady’ performers during the heated buying activity of early 2009.
Although it has never been clear whether all of the buying activity this year was in response to retail demand or whether a large proportion was simply about replacing stock that was run down at the end of last year, it is now apparent that it will not continue in the same vein. Dealers are now reporting reductions in showroom footfall and retail sales while auction conversion rates have begun to fall closer to ‘normal’ levels after reaching as high as 100% on numerous recent occasions.
The question now is whether the market will return to the doldrums or settle into the more familiar patterns seen during the years immediately prior to 2008. Much will depend on consumer confidence and with the UK and US financial systems still clogged with toxic debt, together with deepening global recession, this is extremely difficult to predict. CAP is currently erring on the side of market stability rather than a return to the volatility seen during most of the last 12 months.
Although the recent market correction saw significant increases in value for most vehicles, analysis of used prices over time show just how serious last year’s reductions were. Taking ‘headline’ values - those which include the impact of plate changes - most vehicle sectors are still significantly weaker in average prices today than a year ago. In fact, only City Cars and Superminis show an increase this month compared with April 2008. Average values in every other sector remain down - in the case of Executive models and 4x4s by 19.3% and 17% respectively.
Ends
Charts
1. Year on year headline average used car values for April 2009. Note: red = reduced values. Measured at 3 years / 60,000 miles.
|
Headline Movements
|
Apr-09
|
|
City Car
|
6.6%
|
|
Supermini
|
3.4%
|
|
Lower Medium
|
-10.2%
|
|
Upper Medium
|
-14.9%
|
|
Small Executive
|
-12.7%
|
|
Executive
|
-19.3%
|
|
Luxury Executive
|
-18.3%
|
|
MPV
|
-17.7%
|
|
Mini MPV
|
-5.7%
|
|
4 x 4
|
-17.0%
|
|
Sports
|
-12.5%
|
|
Convertible
|
-14.0%
|
2. Month on month average used car values, by sector, at 3yr/60k, showing the strength of prices reported in the April edition of Black Book. All figures show an increase.
|
Headline Movements
|
Apr-09
|
|
City Car
|
4.6%
|
|
Supermini
|
5.9%
|
|
Lower Medium
|
7.9%
|
|
Upper Medium
|
7.7%
|
|
Small Executive
|
7.7%
|
|
Executive
|
6.9%
|
|
Luxury Executive
|
0.0%
|
|
MPV
|
5.3%
|
|
Mini MPV
|
6.5%
|
|
4 x 4
|
6.4%
|
|
Sports
|
3.1%
|
|
Convertible
|
7.7%
|
ends
Note: The published version of this article can be seen on page 48 of the April 17 hard copy edition of AM
|
