Used car market showed stability as volumes rose in January

Used car market showed stability as volumes rose in January

Manheim Leeds Auction

Results released today by Cox Automotive show that wholesale volumes rose month-on-month in line with expectations in January, a sign that the used market is following normal seasonal patterns despite uncertainty in the economy as a whole.

January also saw the average value for part-exchange vehicles sold through Manheim’s auction lanes increase by 5% year-on-year to £4,369. Average mileage (75,716) remained on a par with mileage figures observed throughout 2018.

The results came as the SMMT reported a -1.6% fall in new car registrations for the month.

Philip Nothard, Cox Automotive UK’s Customer Insight and Strategy Director, said: “It’s positive to see the used car market following its normal seasonal pattern despite challenges in the new car market, some lingering issues around WLTP, and consumer uncertainty ahead of Brexit.”

“The market for ready-to-retail vehicles, in particular, remains intensely competitive as dealers focus on the used market to bolster new car sales.”

January’s SMMT results also showed a further decline in new diesel sales (-20.3%), and the trend is starting to have a knock-on effect on used cars, with half a million fewer diesel vehicles in the market over the past two years.

Nothard continued: “The dawn of ‘dieselgate’ three years ago had a relatively low impact on the used market when compared to new. However, we are starting to see lower numbers of diesel vehicles in the ‘nearly new’ age bracket.”

Further evidence of a strong appetite for used cars comes from NextGear Capital, Cox Automotive's wholesale stock funding business, which saw its dealer customers fund a record number of vehicles in January. The business recorded a -2.8% month-on-month decrease in the average cost per unit to £7,656, while average holding days increased by three to 67.

There was more positive news from Dealer-Auction.com, Cox Automotive’s trade-to-trade online auction platform, with vehicle sales up 10% year-on-year, and a 7% average price increase to £5,097.

Moving to the retail market, results of the latest dealer sentiment survey from Modix suggest that more than half of dealers feel margin pressures are worse than the same period last year, with only 15% citing margin growth.

Nothard concluded: “Consumer interest in used cars was broadly in line with expectations. New car sales were more challenging, which could be partly due to increased rates and reduced incentives making upgrades less attractive to existing PCP customers.

“Stocking the right cars on the forecourt is key, and dealers would do well to look for affordable family cars (sub £10,000), as consumer demand is strong in this category.”

“As we move through February, uncertainty around Brexit in March, and new WLTP tax implications will encourage fleet owners and consumers to hold on to existing vehicles for a little longer, and I expect to see a continued focus on aftersales activity.”

“Despite the external challenges faced by the automotive industry, there is still cause for optimism. The used car market is relatively stable, and retailers looking ahead to the rest of 2019 remain focussed on capitalising on the opportunities in this area.”

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