Used car market goes from strength to strength as sales soar, says CAP

A SUMMER of soaring used car sales continued last month, according to the latest research by CAP Automotive, the car information experts.

Ever-increasing demand from motorists has put a smile on the faces of independent used car dealers for most of this year – and July’s market performance was the best yet.

Each month CAP questions a ‘Dealer Insight Panel’ of around 100 independent used car retailers. It is part of the research for Black Book Live, CAP Automotive’s unique real time used car trade values trending tool, used by businesses across the industry.

In the latest survey of 108 dealers across Britain, almost 85% reported that July brought an increase in used car retail sales. Only one dealer reported fewer sales, while the rest said they had maintained the same level of retail activity achieved in June.

This was a significant improvement on the previous month, which was itself a cause for celebration for independent dealers.

Seen in tandem with the remarkable success of Britain’s new car market this year – consistently leading the way on new registrations while the rest of Europe struggles – the strength of used car sales demonstrates a serious consumer appetite for cars in 2013.

The only negative indicator among CAP’s measures of independent dealer performance is the description of their own forecourt stock levels as “too low”, by 85 of the 108 dealers questioned. Dealer stock levels in the independent sector have not been described as too low since April. However, dealer confidence about the next three months is strong and their description of the current business climate is more positive than at any point in the past two years.

Mike Hind, of CAP Automotive, said: “The car market in Britain is one of the leading lights in our economic recovery. New car sales have been outpacing every European country and the used car market is also showing real strength.

“Motorists are benefitting from all of this, as well as dealers, because a healthy used car market tends to prevent runaway depreciation.

“The strength we are seeing in retail used car sales is particularly welcome at the moment because the unprecedented incentives being offered to make new cars more affordable than we have seen for decades would otherwise pose a severe risk of greater depreciation.

“Whenever new cars are heavily discounted, or offered with other financial incentives, it tends to mean prices on cars up to 12 months old have to be reduced to keep them competitive. That inevitably ripples down through the age bands and can damage confidence among dealers who face losing profit through greater depreciation on the forecourt. Cautious dealers then push prices down in the trade market and this can become a vicious circle.

“But this year, thanks to sustained demand from motorists, depreciation has not accelerated in the way we have sometimes seen historically, when new car sales were stimulated by the heavy reliance on discounts and offers.

“For cost-conscious motorists the next few weeks will present great opportunities for bargain hunting. Franchise dealers will be pushing new cars even more heavily and independents will be determined to compete by offering the best deals possible during a period which tends to see the used car market slow down.”