Business Car magazine asked us what increased volumes of pre-registered cars might mean for the fleet sector next year. Follow the title link to see what we told them.

Comments for Business Car – November 6 2012

What will pre-reg do to the market next year?

Mike Hind, Communications Manager

Pre-registration is already having an impact on the trade market. After months of lower-than-usual depreciation, due to the absence of oversupply, prices have started moving down again. It’s not just pre-reg causing this. For example, we’re seeing an influx of 12 to 15 month old ex-rental stock too.

But our view is that this will wash through quite easily and the fact is that there is demand for a lot of the pre-reg vehicles that are now appearing. This demand is unlikely to stall if the anecdotal reports we keep hearing about the growing availability of finance turn into a real loosening of finance restraints and an increase in lending liquidity over the coming months. This will only drive greater demand for nearly new cars, which will soak up much of that increased supply.

Whether fleets need to be as concerned as recent headlines suggest remains to be seen. Our own view is that the 3 year old sector is sufficiently distanced from nearly new and new for there not to be an immediately depressing effect from falling later values. The fact is that the old oversupply has been taken out of that area of the market and even now 3 year old prices are not moving down in proportion to later values.

Of course, if pre-registration leads to a return to the old norms of structured oversupply, then in time that balance of supply and demand in the used fleet sector will be overturned and fleet values will significantly weaken again. But, so far, that is not happening and we aren’t currently expecting it to during 2013.

ends