Used car supply constraints will lead to rising trade values, says CAP
The January edition of Black Book reports that exceptionally high auction conversion rates in December were fuelled by a genuine appetite for stock among dealers.
Research during the early days of 2011 confirms that stock remains scarce and "serious buyers" are already out in force.
CAP traces the first signs of the strong resurgence in trade demand back to the severe weather during early December. Despite winter conditions preventing many buyers from physically attending auctions, online bidding activity soared.
Retail activity has also been brisk, creating an immediate need to fill spaces on the forecourt during January.
Looking ahead to the rest of the year, CAP believes that supply constraints are unlikely to ease in the short term. It is also noted that many dealers are working hard to avoid low used car stock levels after they were caught short at the beginning of 2009.
Black Book research editor, Mark Bulmer, said: 'The conversion rates for some December sales were remarkable, tipping 90% in some cases when we might "normally" expect the figure to be well below 50%. This gives an indication of the current balance of demand versus supply and a pointer to the likely condition in the early part of 2011.
'The memory of early 2009 remains fresh in the minds of many. Those who had de-stocked at the end of the 2008 downturn quickly found themselves behind the game and there is a determination not to repeat that understandable mistake.'
CAP warns that margins will be under pressure, with retail customers unlikely to pay more if trade values do rise significantly, while stock acquisition will prove a headache for many over coming months. However, Mr Bulmer added: 'For disposers who offer high-quality, well-prepared stock and dealers who are sufficiently nimble to keep up with both the trade and retail dynamic there will be opportunities for real success.'