February 2018 Market Report

Strong February for Cox Automotive reflects dealer confidence and buoyant market

February proved a strong month for Cox Automotive with wholesale prices remaining buoyant, highlighting a solid month for the used car market.

Cox Automotive's Monthly Market Report February 2018

Cox Automotive's auction business, Manheim, recorded a third consecutive annual rise in average prices, with vehicles passing through its online and physical lanes achieving an average of £7,158, an increase of nearly 12% year-on-year.

The appetite for used diesel in the wholesale market continues to contrast sharply with the new car market, with values at auction increasing by 5.95% in February (£9,046 in 2018 vs. £8,538 in 2017), and vehicles in the 10k to 20k mileage band achieving the strongest average growth in value at 4.41%.

Manheim figures also show significant growth in demand for petrol vehicles, which experienced double-digit growth of 20.05% year-on-year to £5,126. (£4,270 in 2017).

Philip Nothard, Head of External Communications, said: "Our data shows that the only category where petrol values didn't grow was the £10k to £20k mileage band, which is where we've seen diesel excel. Petrol vehicles in this band dipped 1.38% to £13,415 in 2018, which is down from £13,603 in 2017."

Average mileage for all fuel types continues its downward trend, shifting from 59,065 in January 2018 to 57,898 in February and overall volumes were also down (6.71%), with an exception in the 10k to 20k mileage band at 3,517 (up 2.39% on 2017 at 3,601).

Nothard said: "We believe the dip in overall volume is down to a number of factors. Scrappage schemes, a decline in new car registrations, the trend towards consolidation creating larger retailers and the general shift among dealers to focus on used car stock are all having an impact.

Tight control on stock management is going to be key for any dealer
- Philip Nothard, Head of External Communications

"This is driving a strong wholesale market, with demand for used stock outstripping supply. The quality of stock coming through the auctions is however of consistently high quality and Manheim is seeing extremely busy sales with dealers chasing the ready-to-retail vehicles to drive stock turn and reduce days in stock - it's all about helping dealers to sell cars faster when consumer demand is peaking."

Dealer Auction, the UK's largest trade-to-trade online auction platform, continues the positive picture and reported a 6% increase in vehicles sold year-on-year with the average sales value showing a 13% rise (£4,752 in 2018 vs £4,208 in 2017).

NextGear Capital, Cox Automotive's wholesale stock funding business, saw the average cost per unit decline slightly to £7,002 in February (£7,241 in January) and the number of dealers using NextGear Capital increased from 1,387 to 1,427 in the month.

In the retail sector, figures from Cox Automotive's car search platform, Motors.co.uk, reveal year-on-year stability with a slight increase in average selling price of 0.02% (£12,425 in 2018 vs. £12,423 in 2017).

The average price of petrol vehicles on the site went up by 3.67% in February 2018 (£10,401) vs. 2017 (£10,033) and diesel started to shift downwards, falling 3.68% (£14,147 in 2018 vs. £14,687 in 2017).

Nothard said: "Overall volumes remain stable in the retail sector, with petrol volumes dipping slightly (down 0.34%) and diesel rising (up 3.90%).

"In addition, Motors.co.uk's data shows consumer demand for petrol and electric vehicles grew significantly in February. Average days in stock for petrol fell by 2.4, from 41.6 days in 2018 compared to 44 days in 2017, while the average for electric vehicles dropped by 11 days, standing at 43 days in stock in 2018 versus 54 in 2017."

Overall, February was a positive month for dealers, as Nothard explains: "Many dealers are describing February as their best month ever and reporting record numbers, ending the month on a confident note."

Nothard added: "Moving in to March, it's clear this will be a key month for dealers. Not only will there be the usual seasonal impact of Easter to contend with, but the adverse weather conditions at the start of the month are likely to take their toll.

"In addition, with new car incentives easing and interest rates rising, it's likely the gap between the new and used market will widen, with increased demand across all mileage brackets driving strong prices as dealers shift their focus to used cars to drive revenues."

Nothard concluded: "Tight control on stock management is going to be key for any dealer, they will need to keep a close eye on the market, as data and insight driven stock profiling could make all the difference this year."