10 December 2013 - The Year Ahead BCA blog by Simon Henstock, UK Operations Director
A year ago, we were saying that used car values could not possibly maintain this upward price trend forever and while that is no doubt correct, there has been little in 2013 to suggest otherwise.
There has been a growing sense of general economic optimism over the final weeks of the year and that feel-good factor has definitely been apparent in the wholesale used car markets. Availability of good retail-quality stock will remain critical, however, if dealers are to meet the needs of their customers.
We have seen an upturn in the supply of dealer part-exchanges at BCA, reflecting reports that retail sales have been strong. However, supplies of fleet & lease vehicles remain constrained, a consequence of the reduced new car sales to the business sector following the onset of the financial crisis in 2008. Both fleet/lease and dealer P/X values have been running at record levels at BCA in recent months as dealers have competed for stock for their retail forecourts.
Looking into 2014, January typically brings an uplift in activity, and this is usually sustained until the Easter period – which often represents a watershed in demand. Whether or not we see the sustained price evolution we have experienced over the past 24 months will largely depend on stock availability and buyer confidence, as price is effectively set by the balance between supply and demand. Making it easy for professional buyers to source and acquire stock is critical, so they can turn retail opportunities into firm sales and the digital arena has a big role to play here.
Longer term, continuing economic confidence is the key factor going forward. Recent indicators suggest the economy is improving and employment levels remain high and this may tempt even more retail buyers to consider changing their current vehicle for a ‘newer’ used car. There will always be activity in the used car market as a result caused by changes in lifestyle – the growing family, a young driver passing the driving test, a windfall purchase, the need for reliable transport to get to work and back – but we must not lose sight of the fact that many families continue to struggle with rising costs while wages are static or even falling in real terms.