News Digest – Spring 2016

Used Market Place Trade Talk

‘Yo-Yo Effect’

The used markets for both cars and commercials remain in a constant state of flux. Week on week, we are experiencing great sales one day, and terribly ones the next, with similar stock being offered on both days!

yo yo effect

It is of course reflective of activity on the forecourts, which is almost unpredictable these days; so much depends on the weather, local and national events that can take custom away and the current state of the economy. Any bad news on the latter can turn a day into a bad sales day, putting buyers off. Conversely if Dealers have a good weekend, then they all come back to market the following week and buy to fill the gaps in their forecourts; this of course translates into good auction sales.

In the Commercial world, the desire for white stock remains. Some selective colours are being bought to brighten the forecourt.

lurid green vanAt Exeter, this lurid green Vivaro was purchased very cheaply to add some variety; and it worked, the van sold within days!!

Buy ANY volume in this colour would not work and would quickly run out of buyers. That is why Dealers prefer the odd one or two colours to brighten the forecourt but, the predominance in the LCV world is WHITE!

New Registrations Continue Apace

Here we are again in March, with plenty of new 16 registered cars and vans arriving on our roads. In fact according to official figures, this marks the 28th consecutive month in a row of continued increasing registrations of new cars and vans.

16 PlateWhilst this is good news for Manufacturers, it does provide some ‘clouds on the horizon’ for the used markets. Once all this stock washes back into the markets in approximately another 3 years’ time, supply will begin to outstrip demand, with a consequent fall in prices.

BCA have quoted a 2.9% drop in prices this month over the same period last year, which is pretty much constant now month on month.

This must be borne in mind when predicting residual values in the years to come, as volume will surely eat away at residual values, both in percentage and hard cash terms.

New transitNearly New Markets

As a consequence of this shifting market, the riskiest sector remains the nearly new used vehicle, car or van.

New Transit is holding up well at the moment in the used markets, owing to the ‘honeymoon period’ and relative lack of supply. How long this can last remains Vivaroto be seen but, probably not until the summer.

Interestingly though, one sector that has seen the biggest increase in demand is the Vivaro sized van sector, with new Transit Custom being the new kid on the block.

T280 vanIt seems everyone wants a van of this size, as it costs very little extra to run than a CDV, but can carry a lot more. Equally, it is not seen as a problem to park outside a house with, like larger T280 vans are.

Transit Custom though is defying the trends; it is long past its honeymoon period with reasonable volume now appearing at market.

And yet it still out performs Book by considerable margins. Quite how long this can last remains to be seen, but this is certainly the sector to be in.

Mileage Impacts Values

One noticeable difference in both the car and commercial markets currently is the trade’s lack of interest in any stock with more than 90,000 miles on the clock.

mileage dashboard

Their rationale is simple too; most sizeable Dealers operate with warranty ‘pots’, whereby they manage their own warranty claims. The more they claim the higher their fees, so they try not to make claims wherever possible. Thus they ‘hedge their bets’ with mileagy stock, assuming that it would be detrimental to their warranty managed ‘pot’.

Also, it is very hard to place further finance on any stock with greater than 90,000 miles on the clock. And so such high mileage stock is left very much to subprime or smaller traders, all of whom traditionally pay much less for the stock.

Manheim Shepshed on Stream

Manheim ShepshedA further Manheim site added to the portfolio this month is at Shepshed, which is located close to Leicester just off junction 23 of the M1.

This site has always been a part of the Manheim Empire but was placed in suspension 3 years ago when dealer car sales were transferred to their newly acquired Bruntingthorpe site. Subsequent attempts to sell the site for re-development fell through, so Manheim decided to develop it themselves into a dedicated LCV and LGV Centre. In fact it replaced their Leeds Rothwell site, which was converted into a car only auction.

The inaugural sale was held in early January, so we have joined it this month with a section of vans. And the results have been very promising, if not quite to Haydock standards. But with more major players joining the centre this month this looks sure to succeed. With just FLAG as the only close competitor, we can benchmark both as we go forward.

New Model Update

There are two interesting additions this month, from a residual forecasting perspective.

SAIC Maxus V80 Van Range

The first in the re-emergence of the old LDV Maxus, now being marketed from a Chinese Manufacturer SAIC, as the, guess what SAIC Maxus!!

SAIC Maxus V80 Van Range

And looking at the images and specifications they appear to be exactly the same van that was churned out of Birmingham a few years ago, including the use of a Ford derived 2.5TDCi engine, but only to Euro IV.

They are cheap though and, so will have some appeal to some Users who want a new van, at used prices! Predicting RV’s will be fairly simple too, they will be as cheap as the old LDV Maxus, or even less for fear of spares availability (from China). So the write doubts if they will pose a challenge to Ford, Vauxhall, Renault, PSA etc, but Leasing Companies may well be doing some soul searching to get their rate books accurate. Especially if Local Authorities show an interest!

New Hybrid from Kia

In the car world, an interesting addition this month is a new Hybrid, from Kia.

New Hybrid from Kia

The Kia Niro compact SUV has been announced at the Geneva Motor Show, featuring a 1.6 engine and a 6 speed gearbox, producing 89g CO2 and 74mpg. Those figures are ok and in line with many other new models but, the real surprise is the price, starting at just £18000. This compares to its closest competitor, the Prius which starts at £23000. This will translate into some very strong residual values, especially as the car looks normal, a modern fresh SUV that will certainly appeal to a wider market of buyers.  Add to the mix the usual Kia high specifications and a 7 year warranty, this car looks certain to take the Hybrid world by storm and will give the traditional players cause for concern.