Used Market Place Trade Talk
The market slowdown that was detected last month continues. With the election now largely over, traders are breathing a collective sigh of relief at the ‘no change’ vote.
Whilst the results may have provided some surprises, the reaction of the used markets did not; it was very much business as usual after the election, with traders returning to auction to buy stock.
This was in anticipation of retail footfall returning to the forecourts which, by and large has happened. We have seen ‘seasonal normality’ this month, post-election. That is, stable but not busy, a position which is expected to last through the summer.
Whilst none of the main parties had much to say about the motor industry in general, instead focussing on the normal election vote winners such as education and the NHS, there remains a key issue that could dramatically affect our motor industry.
That is the thorny question of the EU and the ‘in/out referendum’, now promised by the Conservatives. There can be no doubt that, without the UK membership of the EU, the future presence and investment of the Motor Manufacturer’s in the UK could be in doubt.
Currently, none of the Manufacturers have ‘gone public’ on their views of a UK outside of the EU but, no doubt as the referendum approaches, this will come to the fore.
Enough of the election, at least now business can return to normal; but it is interesting to know how much an event such as this affects the used markets, with a distinct lack of consumer confidence to commit to a new car or van purchase.
This month we have seen car volumes continue to return to market, creating an oversupply situation. This has led to falling prices and, in many cases, simply a ‘no sale’.
As a result, traders are picking and choosing their way through the stock, preferring the ‘something different’ to the normal fleet car. Cabriolets are back in season, especially given the good weather of late. All models, especially the ever popular Mini, are seeing a resurgence of demand.
At the other end of the seasonal scale, the 4×4 market remains extremely quiet, with double cab pickups particularly affected. They are still selling, but only if they represent good value.
The LCV market remains stable though, with lesser volume about. Indeed, the small panel van sector, dominated currently by the Vivaro, has dried up this month. Thus most models presented, unless very badly damaged and/or high mileage, are selling readily.
The smaller van sector is less buoyant though, with quite a large volume of Connect and Berlingo vans about.
So again, if the vans are clean and with decent sub 80,000 miles, they will sell, but only for Book, not over.
There has been much talk lately over LPG vehicles, especially vans. Whilst the LPG suppliers might have us believe that there remains a future for LPG, it seems that the political agenda suggests otherwise. All parties are now fully committed to zero emission alternatives, even though LPG does offer a low emission fossil fuel alternative. Added to the fact that no Manufacturer currently offers a right hand drive LPG new vehicle, car or van, the future does indeed look bleak in the UK for this fuel.
There does; however seem to be a fairly healthy aftermarket in the UK for LPG systems. This is also reflected at the used markets, where properly fitted and certified LPG vehicles will achieve petrol equivalent RV’s.
The debate over the massive increase in finance penetration to the new car market with PCP type product continues. This month, Glass Guide have predicted a significant impact on forecast residual values in the 1-3 year old sector for cars, where volume is expected to increase in the next few years. As we have said previously, it is a double whammy for the used markets, because the volume of low mileage 1 – 3 year old stock will increase and, the number of buyers will decrease, because many main dealer groups will increasingly sell their own stock. Time will tell, but caution for RV forecasting is needed, going forward.