New BCA report addresses evolving UK used car market
Entitled “The Closer View: A National and Regional Market Review”, the report is by Professor Peter Cooke, Emeritus Professor in Automotive Management, University of Buckingham and addresses the range of issues affecting the country’s new and used car sectors and examines how consumers might change their views on what cars to own and how they buy them.
The report says that stronger private new car registrations over the past two years will be beneficial on two fronts. They will provide around 350,000 additional first-time used cars when they eventually enter the used car market, and will have already been party to a similar number of trade-ins and private-to-private used car transactions necessary to part fund the new vehicle.
It added that he growing 25-plus fleet new car volumes will take some time to filter through to the used car market, currently changing hands at auction at 39.8 months on average.
The SMMT’s latest forecasts see the new car market rising by 6.1% to the pre- recession level of 2.4 million units in 2014, and by a further 0.5% to 2.42 million the following year.
However, the report adds in a few caveats for the used car market following the rise in 2013 new car registrations. On the back of this growth, the report echoes CAP’s warning about ‘growing numbers of nearly-new cars and a continuing shortage of ‘clean’ three and four year-old cars which pose a threat to the used car market’.
The report also says that average Fleet and Lease values have risen steadily over the past two years to £9,162 last December, a rise of 11.3% on the previous year – accelerating to an all- time high for the sector of £9,624 in April 2014.
However, supplies of Fleet and Lease cars are likely to remain constrained for some time, a result of reduced new car sales to the fleet and business sector following the onset of the financial crisis in 2008 and the relatively slow recovery since.
Looking ahead, BCA’s view is that the overall shortage of used cars, and the issues of supply versus demand, will see a continuation of high conversions and higher selling prices in 2014, in what is best described as a sellers’ market.
The report also examines macroeconomics and regional variations, new car sales and used car supply, regional influences on the car buying decision and future prospects and needs of used car buyers/
Professor Cooke commented: ‘Economic recovery is affecting different parts of the country at different rates, and in different ways, in terms of inflation, earnings and unemployment. While, for example, escalating house prices may be creating a feeling of increasing wealth in London, they are probably having little impact in most other regions. There is no panacea for the changing marketplace, the critical point is to be aware of those local and regional developments and to be able to respond to them effectively.’
The report is available from the BCA website at www.bca.co.uk