Fleet cars going through the auctions are currently enjoying healthy prices thanks to a lack of decent quality stock for dealers to buy, but the good times in the remarketing area for corporates look set to become less rosy in the months ahead.

Ex-fleet stock (lease and contract hire vehicles) values at Manheim are currently around 4.1% up on the same period last year, despite a slight blip recently. The story is similar at rival BCA where ex-fleet and lease car values are up 12% year-on-year.

But good things always come to an end and opinion among the remarketing firms and price guides is that the market will begin to soften over the summer before dropping either late this year or early next year (the latter more probable due to the timing of the beginning of interest rate rises by the Bank of England).

April may have been a precursor to this, being a much tougher month than has been witnessed so far this year.

BCA’s UK operations director, Simon Henstock, said: ‘With Easter typically representing a watershed in terms of demand, the market is now moving into a period over the summer months when we expect values to remain relatively flat.

‘Families are now thinking about paying for their summer holidays, and we still have the distractions of the football World Cup to come. History tells us these massive sporting events have notable if short-term effects on the retail sector and therefore impact on demand in the wholesale car market.’

Jon Mitchell, Autorola UK’s sales director, also expects the market to undergo a seasonal softening across the summer months.

He added: ‘We still don’t feel that the volumes of good used cars coming into the market will be sufficient to experience a big fall in prices through autumn and winter.

‘2015 may see the turning point for the used market as it starts to cope with two strong years of new car sales that will be starting to reach the used market.’

And some of the vehicles returning to the market will cause particular problems because of their specification – fleet-specific “business” models designed to lower tax liability for company car drivers but which may not appeal to private buyers wanting sporty or high-spec cars.

Glass’s director of valuations and analysis, Richard Parkin, added: ‘In the medium term, increased latent demand for cars stimulated by economic growth will be insufficient to mop up what will be significant increases in supply, exceeding 10% in volume terms versus last year.

‘Growth in supply will principally come from fleets, as volumes created by part-exchanges are already present in the market, and the new car sales generating part-exchanges are growing more slowly. However, increasing fleet volumes are likely to produce a greater number of business specification vehicles.

‘The consequence of this is that values for such specifications will fall but, once at a certain level, these will drag values for higher trim levels down a little as well as prospective used buyers see value. Volume marques may be even worse affected as more badge-conscious buyers find that they can afford a basic specification car with a prestige marque, and so increasingly shy away from D-segment volume cars.

‘As a result, I would expect a changing landscape for used cars – whilst we don’t expect the overall average value of used cars to decline much, the changing mix may mask the real story.’

This point is echoed by CAP, which points to vehicles in several sectors coming under pressure due to increased volumes coming back from daily rental and manufacturer-forced registrations. It also points to an increase in PCP part-exchanges in the market (a form of finance which has soared in popularity thanks to huge support for deals by manufacturers).

CAP’s Gold Book iQ senior editor, Dylan Setterfield, said: ‘It’s important to emphasise that the increase in PCP is not synonymous with new car sales growth. A lot of the growth in PCP is cannibalised from other sales channels, whether that be other credit options or outright purchase. Also, there is a fear that these vehicles will all come back in three years' time and some observers have been peddling scare stories to this effect.

‘The reality is that manufacturers are putting offers together on a wide range of durations and the vehicles will come back at different intervals. Most of them, if renewed with the same manufacturer, will come back at around 6-12 months before the scheduled contract end date and will form a staggered chain of used car supply.

‘We will see some increase in volumes coming back into the used market as a result of PCPs, but some of these would have been coming back into the used market anyway and we expect demand to be strong enough to cope with the additional increase in supply going forward.’

The wider economy

The Bank of England has signalled that it intends to keep interest rates at their record low of 0.5% until the first quarter of 2015.

While remaining conscious of the need to not derail the economic recovery and consumer confidence, most economists believe that small, gradual rate rises will commence around this time as the bank aims to meet the target of CPI inflation at 2% in two years’ time.

Technically rates should already have begun to rise – new governor Mark Carney stated that once unemployment fell below 7% that would be the trigger for rises. Currently, unemployment stands at 6.9%, but that bank has reaffirmed that rates will not change until spring 2015.

Falling unemployment is a further signal of improving economic conditions, allied to a booming housing market. The latter, however, is a cause for concern and is something the bank is looking at reining in.

UK house prices grew by 10% in the year to March 2014 – returning to average levels last reached in pre-crash times of 2006. Importantly, growth has not just been limited to the London bubble – house prices rose by more than 5% in 10 of the UK’s 12 regions across that period.

But while prices are rising, there has been a lull in market activity over the past few months – mortgage approvals were 10,000 a month down during the first quarter on what the bank expected and this trend may continue with the advent of the more stringent lending criteria implemented in the Mortgage Market Review.

There are also signs of a slowdown in the global economy – GDP in the US was flat over the first quarter while in China it was slower than expected. Eurozone GDP only showed a slight increase and GDP in the UK at 0.8% in the first quarter was lower than expected.

All of which may impact on the used car buying decisions of the public in the months to come.