If your garage includes a used car forecourt, keeping an eye on latest data and trends in the market is essential for buying the right stock, pricing it accurately and selling it quickly.
The May 2015 report from auctioneers Manheim recorded another month of consistent values in the part-ex sector. Largely considered as a key indicator of activity in the used car sector, Manheim’s Market Analysis showed the average part-exchange vehicle went for £3,308, just £59 below April’s average figures. Mileage and average age were also comparable to April’s cars, which, in turn, were in line with the average age over the past 101 months whilst average mileage increased slightly from 75,112 miles to 75,936.
Compared to May last year, the trend of appreciation continued with May’s values £231 (or 7.5%) higher than figures for the same month last year. Steady prices over the past two years have helped consolidate values and underpin a further year of consistency for the used car market which experts predicted for 2015.
By contrast, the National Association of Motor Auctions (NAMA), which gathers data from all its auction house members, revealed the average sale price in May increased by £172 on the April 2015 figure from £5,228 to £5,400. However, it was marginally down from £5,420 in May 2014 to £5400 in May 2015. Sales volumes for May 2015 were down by -10.2% in comparison to the April 2015 figures. In terms of a year-on-year comparison, vehicle auction sales were up by 3% from 103,666 in May 2014 to 106,752 in May 2015. So, whilst there are slight differences between the two reports, largely, a stable used car market is reflected by both.
For used car dealers, understanding vehicle demand for your business and locality is crucial for success. Stocking the right vehicles which your customers want to buy, will be the key differential for businesses in the remaining part of 2015, according to industry commentators.
Demand remains high for good quality stock which means keeping an eye out for those exceptional part-exchange vehicles which are likely to be on car buyers’ wish lists and traders will no doubt be working hard to secure those sought after vehicles at auction. If you have a good relationship with local franchised dealers, you may be offered the cars which do not match the profile of their used car stock. These vehicles are likely to be newer and higher value than the part-exchanges from motorists looking to buy from most independent used car outlets. If you don’t have strong relationships with local franchised dealers, it would be a good time to forge those links to improve your source of stock.
The franchised sector is continuing to register new cars in increasing numbers with accompanying part exchange vehicles, understanding the current activity in the franchised sector will help you better read the used car market and therefore increase the likelihood of making stock decisions which are the most profitable for your business.
New car sales have grown by 2.4% year-on-year which translates to a sales increase of 5.7% in the first five months of 2015, thus creating a long term supply chain.
In the fleet sector, Manheim reports a slight decrease in values in May. The average de-fleeted vehicle was worth £7,158 in May, £360 (or 4.7%) lower than in April although the average price is higher when compared with May 2014. De-fleeted vehicles in May 2015 were younger than their counterparts 12 months’ previously, the average age was 51 months, four months younger than de-fleeted cars in May 2014.
The connection between age and values has been seen starkly over the past three quarters. In October 2014 fleet vehicles coming into the market hit a recent low in terms of resale value, but they were also the oldest at 54 months. By contrast, January 2015 was a particularly robust month with de-fleeted vehicles at a record low age of 48 months on average. Obviously, other factors from mileage to spec and condition also heavily influence price.
The de-fleet market is expected to stay strong with good stock making its way to auction and cars are likely to be younger with fewer miles so will be in demand from traders looking to keep their forecourts brimming with good quality vehicles which they can sell quickly for the asking price.
Combining an analysis of your previous sales and of the types of vehicles which sell quickly for the initial asking price, keeping an eye on competitors and understanding market influences including current new car trends will help you ensure your forecourt is stocked with cars that people want to buy. By so doing your stock will turn more quickly and your business will be more profitable.