With the market entering a traditionally quieter spell in the run up to Xmas, the Vehicle Remarketing Association (VRA) is reporting continuing stable trading conditions. In line with VRA predictions last month, prices are nudging down, but only slightly, as lower volumes of stock in the wholesale market are met with corresponding demand.

    The search for those rare two to four year old ‘ready to retail’ lower mileage vehicles is clearly getting harder and there are signs that dealers are hanging on to a significantly higher proportion of their part exchanges, in order to keep forecourts stocked up. Demand for older vehicles, over five to six years is also still strong, with auction conversion rates in excess of 75%. This remains significantly above the current overall average conversion rate of 65%, which in itself is a very respectable performance so late in the year.
    Some downward pressure on the values of late year low mileage vehicles is evident, as a result of a number of highly attractive new car incentives. This is diverting a degree of consumer attention away from used models but, even with supplies of late year vehicles increasing, this is not causing a major problem at the moment.

    However, with values of late year vehicles having recovered well since the depths of recession, they will reach a point when they may not appear to be as attractive as they once did. Perhaps this point is not too far away and amidst the competitive new car market, it would not be surprising if the values of very young vehicles came under some more pressure in the near future.

    With the turn of the New Year only three weeks away, VRA members expect the remainder of December’s wholesale market to remain strong. Some dealers, mindful of strengthening interest and potentially rising prices in January, will inevitably start stocking up prior to the Xmas break and this should be enough to support the market to year end.

    A concerning bi-product of the tough economic times is the increasing number of vehicles having missed their routine service and maintenance intervals. Dealers are having to correct more faults than normal to bring them up to retail standard and, should this trend continue, it is expected that they will begin to adjust their bids to reflect this.

    So, the VRA is advising its members to be aware of the hidden cost of incomplete service records. Further evidence of this comes from the recovery companies who are reportedly attending an increasing number of breakdowns caused by lack of basic maintenance.

    Turning to 2012, the stock shortage will clearly continue, as the reduced new car registrations at the onset of recession, translate into less three to four year old used vehicles entering the market.

    Additionally, there are reports from some leasing company members that average customer fleet sizes are reducing, driven by falling employee numbers and an increase in schemes such as cash for cars.  Some estimates suggest a reduction of 5% to 10% of vehicles returning from the corporate sector this coming year.

    As for the overall market in 2012, the VRA expects this to be quite steady, but this is clearly subject to a number of macro economic influences which, in the current climate, are becoming almost impossible to predict with any degree of certainty.

    The top tip for outstanding price performance in 2012 is for those three to four year old vehicles, across the segments, with a decent factory specification, in a desirable colour and having covered average or below average mileage. Sellers can expect buyers to be queuing up for these with resulting high prices.

    Finally for used LCVs, the market continues seemingly unabated with prices remaining at near record levels across most segments. Again, given the ongoing severe shortage of used models, this is predicted to continue well into 2012 and probably right through to the end of the year.

    With owners of older vans in London also facing low emission zone penalties in the New Year, there may be a spike in the volumes of older vans coming to market, but this is not expected to have any impact on the corporate stock.  The outlook for sellers of LCVs in 2012 is excellent, but not necessarily so for buyers who will have to hunt very hard for the right stock.