Used car market settles down in Q3 after a rocky Q2
Posted 31 July 2019
After months of price rises in the used market across all sectors cars have become a depreciating commodity again in Q2 2019 according to the latest Market Insights report from Aston Barclay.
Brexit apathy, a rise in part exchange volume from the March plate-change and more fleet stock making its way into the market are some of the reasons the used market has seen three consecutive monthly used value book drops.
The market is now having to respond to used car depreciation with Aston Barclay reporting that only the late and low sector (cars up to 24 months in age) seeing prices rise from £14,243 in Q1 to £14,344 in Q2. Ex-rental stock is still in demand with most retailers, thus helping keep prices strong.
Average prices of ex-fleet stock fell by £288 to £9,233, while mileage fell by 2,776 miles to 51,245 miles. Ex-fleet replacement cycles remain at 42 months which still causes challenges with fleets as the used value guides continue to position a typical fleet car as being three years and 60,000 miles. This can cause a disparity between written down values and actual auction values.
Dealer part exchange prices fell across the board which caused headaches for sales managers as they keep their sales team up to speed with the moving used market to ensure they buy part exchanges at the right money and liquidate them quickly to maximise profits.
While new diesel car prices continue to fall, used prices remained stable at £7,511 in Q2 while petrol prices rose £100 in the quarter to £4,306.
For the first time for months sales of new hybrids fell in Q2 which has caused used demand and prices to increase. Average prices in Q2 were £13,636, down £100 from Q1.
“Q2 was the first quarter for some time where the used car market was quite unsettled. We have been working with our dealer, fleet and OEM customers to understand how best to work in these changing market conditions.
“This includes setting accurate reserves to increase first time sale rates,” explained Martin Potter, Aston Barclay’s group managing director.
“Q3 has settled down with increased conversion rates as vendors and buyers come to terms with the changing market.
“As we head towards August there are no indications of pre-reg activity due to the introduction of WLTP2, but we are watching this space for Q4 and into 2020 as manufacturers make decisions about these new regulatory fiscal penalties,” he added.