RemarketingMarket stalls as rising volumes outstrip demandBy Gareth RobertsHeadline figures may well be different, but the underlying trend suggests the used car market is stalling in response to rising volumes.Playing their part are so-called "sticky cars", vehicles in a poor condition that are perceived to be over-valued and as a result are overlooked."This is causing additional re-entries back into a marketplace that is already experiencing rising volumes and no better than adequate demand," explained BCA's communications director Tony Gannon. "The most obvious effect of this is that conversion rates have fallen sharply and are now some 10 points lower than they were in the first days of September."Market performance is being increasingly polarised into good and poor condition cars, and rising volumes from fleet and lease sources have thrown this into sharp relief over recent weeks.As a result, BCA's figures show fleet values falling back after two consecutive monthly improvements, dropping by 3.5% (£270) compared to September, while CAP performance fell by nearly three points to 96.6% and year-on-year values are adrift by £132 or 1.8%.Gannon said: "It is worthy of note that average values for fleet and lease stock in 2011 have declined for seven out of the ten months - further proof, if it were needed, that fleet cars are depreciating assets."It was a similar story at Manheim Remarketing, where it saw average wholesale values for the fleet sector fall by 3.5% (£215). Managing director Mike Pilkington said: "Values have had to settle to more realistic levels and vehicles requiring an element of refurbishment to bring them up to retail standard are becoming less desirable."He continued: "The outlook remains in the balance with the supply and demand equation undoubtedly entering a crucial point in the year."Average values in the fleet and lease LCV sector improved again to £5,111, in October, reaching the highest point since the spring months of 2010. The October 2011 average is the third highest on record and year-on-year values are ahead by £229 (4.7%), while fleet vans averaged 103.6% of CAP during the month.Duncan Ward, BCA's general manager for commercial vehicles, said: "The continuing gap between supply and demand is keeping values firm. However, we are still seeing far too many
vehicles entering the remarketing chain with high levels of damage which reduces their desirability and value to used buyers."He continued: "While everyone accepts a van is a working tool, we see examples of basic
negligence every day that have a real financial impact for vehicle owners. As vans are often Stock issues keep van values high in October"Conversion rates are now some 10 points lower than they were in the first days of
September"Tony Gannon, BCA
NewsinsightFuelpricesSales figuresRemarketing analysisCar RecruitmentreviewsManufacturernewsNews digestHowever, month-on-month price reductions are somewhat normal for this time of year as auction houses remarket the influx of supply created by the September plate change. Buying from dealers also begins to wane as they prepare for the seasonal down-turn in retail sales. Bob Anderson, NAMA committee member, said: "All indications are that the auction market is likely to perform to expectations for the remainder of 2011. "We expect to see stock inventories fall steadily between now and the end of the year, with condition grade four and five cars continuing to be more difficult to sell if unrealistically priced. Trade demand is likely to ease but competition for the best vehicles will remain high."Gannon concluded: "The critical issue for vendors is to get vehicles on sale the first time they are offered - on average, vehicles sold first time around are making £900 more than vehicles being re-offered for a second or third time."Oct£7,287£5,939£7,419£6,115£7,116£6,136£7,235£5,741£7,739£6,124£7,553£6,394£7,545£6,444£7,413£6,250£7,349£6,255£7,071£6,100£7,000£5,905£7,222£5,945£7,557£6,154OctNovDecJanFebMarAprMayJunJulyAugSeptBCAManheimAverage fleet and lease used valuesValues fell as the market become increasingly polarised into 'good' and 'poor' condition carsstaying in service longer, some additional decline in condition is inevitable, but often steps can be taken to 'manage damage'. Driver training, a culture to report and repair damage and in-service inspections are all examples of good practice that can make a real difference."Meanwhile, average wholesale used van values increased by just 0.5% (£22) to £4,037 in October, according to Manheim Remarketing. Compared with October 2010, average values are 1.3% (£55) lower, the average age is seven months higher and the average mileage is up by 3,658 miles.James Davis, director of Commercial Vehicles at Manheim Remarketing, said: "Van values are on a par with the same month in 2010, despite average age and mileage being considerably higher."He concluded: "I do not believe we will see the usual influx of van de-fleet volume in late November early December, so we should see a very buoyant January that serves to kick-start a very healthy 2012 wholesale van marketplace."