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New car marketNewsNewsdigestShowroomAMAwardsNew carnewsAMIndexRecruitmentproduced with no buyers for them. This may only serve to increase the pressures for a little more of this surplus production to come our way.Neither will the used car market escape the general economic plight of the nation. As is usually the case, used car sales suffer less than new cars simply because there is always a need for the public and business to remain mobile, and because a used car always offers a more afford-able alternative. It may well be that customers trade down to a lower value car and this often means an older car. Used car sales trends by age of car over the last two years show that beyond three years, the older the car, the more sales activity there has been. It should also be noted that the decline in the sale of under three-year-old cars is partly accounted for by the shrinking car parc which, in turn, is due to the decline in new car registra-tions. So while total used car sales may be little changed from last year at about 6.6m to 6.8m, the spend could edge back.We should also be mindful of the fact that used car purchases are not just about the headline price. Fuel efficiency and running costs will be an even greater consideration this year - the relaxation in fuel duty hikes is seen as only a temporary respite to rising fuel prices - and there will be a reluctance to sacrifice brands and products with strong images. These thoughts will be at the fore whether a customer has a budget of £5,000 or £25,000.The average price of all cars at the end of December was forecast to be £4,750, some 3.5% higher than a year ago. We also know that, in recent years, used car prices have been increasing in line with the Consumer Price Index (CPI) and the increase of 3.5% last year only slightly falls short of the latest figure for CPI at 4%. This all means that the price of used cars is moving upwards in line with the broader mix of goods and services that consumers buy. In other words, cars are not cheap.As we repeatedly said last year, the relative stability of prices has little to do with demand and much more to do with supply. This supply is inevitably going to reduce slightly as we enter the fifth consecutive year of sub 2.4/2.5m registra-tions. Unless there is a significant fall in retail demand this year, prices are likely to remain firm, or increase slightly. And assuming that retail demand is not dissimilar, the competition for stock will remain strong, aided by a continuing shortage of part-exchanges from a flat new car market. What this does imply is that dealers may well find themselves in the middle of a squeezed sandwich where retail buyers stick firmly to their budgets, and tight trade supply keeps competi-tion and prices high.While the outlook for 2012 is not exactly positive, neither are we painting a bleak picture. The used Fuel efficiency and running costs will have even greater imporance for buyers this year

Used car analysiscar market is likely to display similar threats and opportunities as last year and probably repre­sents the new norm for the next few years.Market Trendn New car registrationsThe SMMT reported that new car registrations fell by 4.2% in November to 134,027 units. The most notable feature of the figures continues to be the lacklustre performance of the private sector. Year-to-date, private registrations were down 14.1% compared to the total market that is down 4.5%. In November, the private element of total registrations was down even further, at 15.7%.If registrations in December amounted to the average of the previous three Decembers (i.e. the recessionary years) the total for the year will be a handful of units short of 1.95 million. This would be a loss of 81,000 units from 2010, or 4%, and it would also be the lowest total this millennium.n Used car salesRetail activity fell into the doldrums during the first few days of December. For some dealers this point was reached during the second half of November. Either way, it was difficult to deter­mine whether this pattern of declining retail sales was consistent with the time of year, or repre­sented a slightly depressed state of affairs. All that we could conclude was that dealers were left feeling a little disappointed especially as profit margins continued to be very slender.n Wholesale marketEven though auction conversion rates continued to ease back to the end of the first week in December, vendors were still satisfied with the results. For dealers selling unwanted part-exchanges, prices were still higher than stand-in values, something that is never guaranteed during late November and early December. Compared to the same time in the previous year, conversion rates were several percentage points higher. The other positive aspect of the market was that bids were also being logged for the poorer condi­tion cars, when in a slow market these are the cars that would be met with complete dis- interest. 4x4s continued to be the height of desir­ability with prices nudging up still further. It is hoped, for the sake of the many dealers who have invested in this type of stock that the bad weather arrives soon.During the second week in December we detected a turning point in activity. This was largely inspired by a growing band of dealers who felt the need to restock for the post-Christmas period. Up until this point, most of the buying activity was concentrated on replacing gaps on retail forecourts. It has been quite noticeable that the amount of speculative buying activity was more muted at the tail end of last year and this has much to do with the uncertainty of the retail market, the fact that nobody has been able to buy cheap cars, and because existing dealer stocks have not fallen too low.n Trade pricesSurprisingly, auction prices were little changed at Demand has helped nudge up prices of 4x4s