Used Car Sales and Values of Used Cars Are On Track
12/08/2013
Trade values and used vehicle sales are holding themselves up, despite the ten percent rise of new vehicle registrations. Research done by CAP, in July, revealed that trade values are continuing to fall by an average amount of 1.6 percent. According to CAP, the drop in trade values, is actually pretty unusual for this time of the year.
Derren Martin, who is a Black Book Live editor, states that one thing that is remarkable is the strength that the used car market is experiencing. The market is relatively stable, despite, the fact that the new vehicle sales continue to rise exponentially. Due to this fact, there has been significant amounts of depreciation occurring, with the newer vehicles that are being sold, which is causing used vehicle sales, to also see a similar amount of growth as well.
Typically, whenever sales for newer vehicles increase, this diverts attention away from the used markets. With attention taken away from the used markets, this will cause there to be a reduced demand for used vehicles, and the values of the newer vehicles that were just sold, would start to depreciate, as they continue to be used, by the individuals that purchased them.
The astonishing increase in the amount of nearly new vehicles that are being introduced to the used car market has caused an imbalance in the amount of supplies and demand to occur. This has forced later plated vehicles within the used car markets values to fall, fairly quickly.
CAP announced that the only areas that they are seeing that are showing significant signs of trade price pressure, are smaller vehicles. Vehicles that are designed for city driving, and superminis, are beginning to depreciate quickly, in comparison to other vehicles that are for sale within the markets. There are some concerns surfacing within the used car markets, about these increasing depreciated values.
Martin believes that the reason why these issues are occurring are due in part by the aggressive pricing that the newer markets are placing on their vehicles. Aside from selling newer vehicles are relatively lowered amounts, there are also attractive PCP deals being offered as well. This is making newer smaller vehicles, a lot more affordable to own.
Through a significant amount of research, CAP has been able to identify that a lot of independent car dealers are beginning to lead the charge when it comes to used vehicle sales. They are leading the charge, as they notice their franchise counterparts are giving a lot of their focus towards new registrations.
Martin states that there is a surge of confidence amongst the independents. These individuals are pleased to see that they have less competition for stocks within the trade markets, due to the fact that there are slightly lowered values. This means that the independent used car dealers, will be able to preserve their margins, and be able to aggressively price vehicles within the forefronts. Aggressive pricing strategies, will enable the independent markets to compete with the newer vehicle markets.
Back to motor trader insurance news