Market Tracker - August 2019

Dealers ‘cautiously optimistic’ on economic conditions

August wholesale data

The used vehicle market held steady in the traditionally quiet month of August, with stable demand in both the wholesale and retail market, according to the latest results from Cox Automotive.

At Manheim, August saw a slight change in stock mix with a higher proportion of part-exchange vehicles, and an increase in average age and mileage MoM. As a result, the average vehicle price was down on July’s figure at £5,663.

Philip Nothard, Customer Insight and Strategy Director - Cars, said: “The MoM drop in average price at Manheim reflects a change in stock mix, rather than a downward pricing trend.”

“In fact, average values were stable in August, and the realignment of pricing guides that we’ve seen over the past two months stimulated demand in the wholesale market, generating strong conversion rates across the month.”

The change in stock mix came at an interesting time for the new car market, as the introduction of new legislation saw unseasonal levels of August registrations for the second year in a row. SMMT figures for August show a -1.6% YoY decline, but this represents a +21.1% increase when compared to August 2017.

Elsewhere in the group, Dealer Auction, Cox Automotive’s digital wholesale marketplace, saw the average selling price hold steady at £4,459, up just £57 on the July figure.

Nothard added: “The continued success of Dealer Auction demonstrates a real appetite for digital wholesale, and in August the business reported that vendor numbers were up 9% YoY.”

NextGear Capital, the wholesale stock funding business, reported a slight drop in average vehicle price, down 3% MoM, while the average number of days for a vehicle to remain on plan fell by one to 60.8.

August fuel data

When it comes to fuel, Manheim data shows that diesel values have taken the biggest dip YoY, down 17.8% when compared to last August.

In contrast, the average AFV value has been up YoY every month for the last six months, a sign of dealer and consumer interest in the vehicles.

Nothard commented: “Earlier this year we commented on the fact that low diesel sales in the new car market have started to impact volumes in the wholesale market.”

“The proportion of 1 – 3 year old diesel vehicles at auction is falling, and this will naturally affect the average price. That said, a used diesel is still the best choice for many consumers, and good condition diesel vehicles continue to sell well at auction.”

Sealer sentiment results August

The automotive retail market continued to face a number of challenges in August, but dealer sentiment from the latest Modix survey suggests a stable market across the month.

65% of dealers surveyed reported that consumer demand was the same or better than August 2018, and while 20% reported that physical footfall had improved, an impressive 39% has observed an increase in online activity YoY.

On margins, the results from Modix revealed a split picture, with 48% reporting that margins were down, while 52% said they were the same or better YoY.

Commenting on the results, Nothard said: “The introduction of WLTP, RDE and the CAFE legislation due in 2020 are all having an impact on the new car market. In recent months we’ve seen more clarification around company car taxation, but long lead times for the most popular new car models mean that fleet registrations are still fairly low.”

“In the used market, longer new car lead times drove transactions in August as some customers opted for a nearly new option rather than wait, and this trend is likely to continue in September.”

Looking ahead, the Modix survey revealed that 59% of dealers expect economic conditions to remain the same or improve over the months ahead.

Nothard concluded: “We’re looking at an unpredictable market with a lot of forces at play, but the retailers I’ve spoken to feel that they can’t let uncertainty stop them from getting on with the job at hand.”

“The survey results suggest a mood of cautious optimism ahead of the September plate change, with tight cost control and maximising margins the key focus for many businesses.”

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