What is the true picture on used car values?

  09 June 2019

The other day I was reading the war of words which has broken out in the housing market. One authority said property values have risen by x, another said `hang on, they’ve only risen by y.’

One was a mortgage lender, the other an industry analyst so you would have thought they knew what they were taking about but it’s like what they say about academics – ask two the same question and you will get two different answers.

And caught in the middle are the poor home owners, or sellers, trying to work out what is the best thing to do.

Ring any bells – like with the used car market? There seems more than a modicum of confusion about the true state of residual and transaction values. This week I’ve read at least two different reports painting very different pictures of what is happening which perhaps adds an element of guesswork rather than data driven analysis to the job of the sales managers wondering how much to pay for replacement stock or how to value a part-ex.

One thing everyone agrees on is that it is getting harder to buy decent stock. Franchised retailers are compensating for slowing new car business by putting more resources into used and supermarkets seem to be flying along but at the same time businesses are holding onto their fleets until the post-WLTP BiK situation is known. However, we await the Chancellor’s decision on this one so don’t hold your breath.

A few weeks ago I bought an 18-plate Land Rover Discovery Sport from Hatfields Liverpool. Nice car, low mileage, great spec and a fantastic price. The guy I dealt with said they had just bought a dozen ex-Land Rover management cars and sold four in about as many days, adding `I just wish I could get another dozen like them but they just aren’t around.’

Supply is short and dealers are competing hard to get it which suggests values are very firm at the moment. But then one reads of a highly reputable auction house warning dealers not to pay too much at the front end of a deal by over-allowing on a part-ex with the plan of clawing back the margin at auction. Not so, it seems, with many cars being presented two or three times and at ever lower prices before selling.

So what is going on, what is the true picture in the used car business?

Like academics, if I ask two traders I bet I get two different answers. Good luck with those part-ex valuations…

 

John Swift

Editor

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