Used Market Place Trade Talk
This month saw a more stable market, after the return to work from the Easter break.
Both car and commercial sales have seen rises at the forecourt, with some dealers reporting a healthy increase in customers.
This has had a positive effect at the auction halls, where some fairly frantic bidding has been taking place on our stock, from all clients.
Part of the appeal of our ‘sections’ are the sheer mix and variety of stock; such as that seen below at Manheim Gloucester during the month. The buyers love the fact that all stock is direct from fleet with, for the most part, full history and documentation available.
Add to that the fact that we are on the rostrum making instant decisions, the buyers bid with great confidence that they know they can buy the stock.
We anticipate this position remaining until the summer recess when, traditionally the markets go very quiet.
BREXIT creating sales
By the time this edition of our report is published, we should know the result of the Referendum on whether we stay or go, from Europe.
Whatever the result, it has become clear that the used vehicle markets have actually gained from the Referendum process.
Let me explain; the housing market is widely accepted to have virtually stopped, ahead of the Referendum; people are nervous about making the huge financial commitment of buying property, without first knowing what impact BREXIT will have on the economy and, more importantly interest rates.
So what do people do, when they cannot buy houses? They buy vehicles; whether it is for retail therapy purposes or as a stop gap until their confidence to buy property returns, this has always been the traditional impact on the markets.
This could explain the sudden increase in demand at the forecourts, which has provided some welcome impetus in both the used car and commercial vehicle markets.
Emissions Scandal widens
The VW emissions scandal continues to provide much interest and debate within the industry although; it has long been my view that VW cannot be alone in this issue. Sure enough, Mitsubishi have now broken cover by admitting to long term inaccuracy of their fuel economy figures which, although not the same as the VW issue, nonetheless could do the manufacturer some harm.
Whilst there remains some confusion over whether this issue affects UK registered vehicles, as with VW, we do not expect there to be a short or long term reduction in used values because of this admission.
Indeed, VW prices seem to be as strong as ever, with vehicles such as the Caravelle seen above making extraordinarily good prices at market.
XBG Business Forum
We held another of our successful Business Lunch sessions during the month, this year at the Landrover factory in Solihull.
This was a well-attended event, with some healthy debates surrounding used pricing going forward; Rob Palmer, the owner of Exeter Diesels also attended and gave delegates a fascinating insight into buyers behaviour at auction, including the age old art of ‘ringing’!
The event finished off with a very interesting tour of the Range Rover and Discovery production lines at Solihull, which operate 24/7, 365 days a year (and still cannot cope with demand!).
My how Ford Motor Company must be kicking themselves, having sold a loss making Jaguar Landrover organisation to TATA, who have transformed it into one of the world’s most profitable and successful brands!
Market Guide Pricing Issues
We have become very aware at auction of the ability to reach the market Guide ‘clean’ and ‘average’; values, for cars and commercials respectively.
We have factual evidence that both the car and commercial markets have seen significant rises in values since the mid recession of 2010, through to today. Indeed over recent years prices have risen almost consecutively, month after month.
Now that the markets have changed from being a sellers’ market to a buyers’ market, owing to there being much more supply available, the high prices seen in the Guides are no longer attainable. Thus performance levels across the industry are dropping. That is not to say that vehicles are not selling, they are. It is just the Guide prices that are not yet reflecting the reductions in price now being felt at auction, because of the far greater choice of vehicles available to the buyers.
So what effect does this have on you, the fleet operator? Well, in truth not a lot, because the vehicles ARE still selling and, for the most part well. Performance against book isn’t great but, if that can be accepted the markets are healthy. The note of caution has to be forecasting residuals though; looking forward at anything over the next 6 years, it is clear that caution has to be taken. If further advice is needed, all of our clients can contact us for impartial advice on any given model, car, commercial, truck or plant.
New Model Updates
At our recent Business Forum, David Hill from Glass’s Guide mentioned the new collaboration between Fiat and Mitsubishi, to produce a 4×4 pickup for Fiat.
This has broken cover recently as the Fiat Fullback, seen below.
It is very obviously a re-badged Mitsubishi L200, albeit in facelifted form.
This is no bad thing though, because the L200 remains one of the most popular pickups on the market, so Fiat seem to be onto a winner here and, will give them a full pickup range for the first time.
Whilst we have not yet seen any pricing in terms of future residual values, it seems likely that with “new prices similar to the L200”, the residuals will also be similar. It is the writer’s view that perhaps on the used markets; the L200 would sell better than its Fiat cousin and, possibly for slightly more money.
Whilst there have been no images released by GM for their replacement for Insignia, the recently published images in Auto Express do suggest that the new car will follow the new Astra, in terms of design. Hopefully it will also follow Astra in terms of interior quality and tech which, if it does, could see the car perform very well indeed in terms of residuals.
This would clearly be a very important model for GM and, more particularly in the UK, Vauxhall, to compete in the important upper medium sector. But unless the car spawns new ‘crossover ‘derivatives, it will become increasingly isolated, as buyers are now very fashion and image conscious preferring the crossover vehicles.