News Digest – Summer 2016 Update

Used Market Place Trade Talk

BREXIT Debate Rages On

BREXITFollowing the, somewhat shocking days and weeks following the BREXIT referendum, the financial markets were predictably thrown into chaos.

The timing of the UK’s actual exit is yet to be decided and, that in itself continues to create uncertainty, as does the lack of any coherent political leadership currently.

The used markets have also reacted predictably, by becoming very quiet indeed. Retail trade for both cars and vans is much quieter and as a consequence the auction halls too are quiet.

XBG Keep CalmBut actually, the markets always go quiet this time of year and do not really bounce back until September, after the summer recess. There can be no doubt that BREXIT will and has affected the markets and, most industry pundits suggest this will continue to do so for the rest of 2016, but there will always be some trading going on.

Prices will harden and, even reverse now going forward, with some sharp falls in residuals expected over the coming months. But again we were always going to get to this point, prices have been artificially high for too long anyway!

The message has to be to keep calm, and carry on. It is no coincidence that I have shown a Christmas bauble above either because, it will take until at least then for some form of normality to return to the markets; but the used markets always bounce back, which is one of the up-sides of having such a reactive market place. It can change from one week to the next.

With our rostrum management, we will ensure that every vehicle is sold for the due worth, maximising every opportunity to increase residuals.

Diesel Debate not gone away

With all of the fury and turmoil of BREXIT, this topic has gone quiet, save for the additional 3% surcharge on company car tax imposed by the Chancellor, in an effort to ‘steer’ people away from diesel vehicles.

This, of course is simply not practicable in today’s fleet industry, having spent the last 30 years forcing people into diesel engine transport, through successive tax campaigns and fuel prices.

However there is a real warning here, because the issue is NOT going away. With the Supreme Court having ruled that the Government must act to curb air pollution and, more specifically with regard to NO2 (NOx gases from diesels), it is clear that whatever shape of Government we end up with will have to deal with the problem.

XBG Fuel debate

The industry is, of course reacting, albeit slowly. Euro 6 engines are now upon us, with Euro 7 expected soon, which will surely impose more stringent conditions with particular regard to NOx. And Ford Motor Company continue their work on a virtually emissions free diesel engine.

The warning today though, is that residual values could be affected. To what extent remains to be seen and, currently there is no movement in the Guides forecasts, over a 5 year period. It is therefore up to Fleet Managers themselves to decide if they wish to begin to write back some of the net book values, on diesel engine stock.

New Model Update

This month is not so much of a new model update, but some repeat advice regarding the latest ‘upmarket’ models from Ford.

The S-Max and Kuga have both been treated to the Vignale effect, with different interiors and some nifty chrome work and alloys on the outside.

There can be no doubt that both models look the part, with premium leather trim and additional electronics, but with a £3000 surcharge over the top spec Titanium versions, this writer doubts very much if any of that premium will be left when it comes to sale time, after any length of contract. Thus care must be taken when pricing such premium models, which are featuring in many Manufacturers price lists at all levels.

XBG Ford S MaxI think my money would be on the, considerably cheaper but more practicable, Mondeo ST Line Estate, being introduced with all engine options.

Fiat Talento

Fiat has recently launched the Professional Talento, which is basically a Renault Traffic with Fiat badges.

XBG Fiat TalentoThis is no bad thing of course, as the basic van has many talents and is extremely popular in the used markets. Thus this new entrant will give Fiat an important foothold into this segment of the LCV market; they just need to hold their nerves with discounts and, if they do, there is no reason why the van should not make its forecast value of £3400 for a 5 year old, 80000 mile example.

General Market Conditions

XBG AuctionsIn general terms this month has been much quieter, across car and LCV markets. Traders are holding back, buying for stock only when the right vehicles are presented. They do still need stock however and so, we expect markets to continue trading and, as long as there are no spike in return volumes before September, conditions should remain stable.

XBG Truck marketThe truck market has seen a slight resurgence this month, in contrast to other markets. Because much of this market is driven by export, it does suffer at the hands of a strong sterling, making exports more expensive. With a weakened pound now prevailing, the export markets are open for business again, so we expect to see some activity in both the truck and plant markets over the coming months.

Classics Remain Strong

XBG VW Camper ClassicInterestingly, the classic car market has remained strong so far, despite BREXIT. This, very tidy VW Camper, imported from Mexico many years ago, still made £11000 at Gloucester, despite having unwarranted mileage.

It remains to be seen if this can continue though, as pensions and savings begin to suffer from the economy. Classics are, typically one of the first markets to suffer, if recession comes back.