A number of leading used value experts have warned about dropping auction conversion rates as values begin to soften and reserve prices fail to reflect the latest trends.
The National Association of Motor Auctions, BCA and Cap have all recently declared concerns, as trade buyers begin to become more selective, especially as warm weather and the World Cup have a chance of impacting upon used car sales, while recent bank holidays have also had an effect.
“This mild disturbance in the status quo has resulted in a small drop in conversion rates and, most importantly, given the trade the opportunity to be a little more selective over the cars they bid on and buy,” said NAMA’s June auction report.
Auction giant BCA backed up that opinion, focusing in particular on the reserve prices for poorer quality vehicles.
“There is an oversupply of vehicles in poor condition and higher-than-average mileage, and sellers should look closely at appraisal reports and condition ratings when setting reserve prices,” said BCA UK operations director Simon Henstock.
“Less attractive or poorly presented vehicles must be valued competitively and in line with condition in order to attract buyers and sell first time.”
But used values expert Cap was most vociferous in its criticism of the fleet sector, with the company stating: “The determination of some fleet venders to hold out for higher prices has been resisted by dealers who are equally determined to pay prime prices for only the highest quality cars.”
The firm claimed to have witnessed conversion rates dropping as low as 50% for fleet sales, compared with the more “realistic” pricing levels of dealer part-exchanges hitting 80% sold first time.
MyCarCheck head of car valuations Alan Senior also said the number of ex-personal contract purchase retail cars coming back is helping to increase numbers of vehicles.
“We are now entering a period where there are more three-year-old cars coming into the supply chain again, thanks largely to the success of PCP,” he said.
Both BCA and NAMA declared a slight month-on-month softening of ex-fleet vehicles, with NAMA’s figures showing a £250 fall in average values to £8725, while BCA reported an £87 fall on May 2014 to £9537.
Year-on-year figures show the market still well ahead of May 2013, £733 up in the case of BCA and £650 for NAMA.
Cap also reported that the number of traditional three-year-old cars is falling. The company claimed that in 2008, 20% of cars auctioned were between 2.5-3.5 years old, but that has now dropped to 13%.
“Businesses and consumers alike have clearly been holding onto cars longer during austere times,” said Cap Black Book Live senior editor Derren Martin.
