Last month’s fall in trade prices for prestige-brand used cars should allay growing concerns amongst dealers about unsustainably-high prices, suggests Glass’s. “This decline had to happen but the trade had grown nervous about the timing and extent of the price falls,” comments Richard Crosthwaite, Prestige Car Editor at Glass’s. “We believe prices are following the same pattern for the time of year as in 2006 and 2007, suggesting that the massive correction in prices witnessed this year is now complete.
“Until next month the market is likely to remain short on buyers, and we have already seen lower conversion rates at auctions over recent weeks. In December I believe we will see the pro-active dealers buying cars ahead of January’s anticipated uplift in values.”
As with the wider used car market, prestige car values had been rising all year, but this phenomenon finally ran out of momentum in early October. “Seasonal factors came into play and dealers were better stocked – especially with late-plate product – at a time when retail demand started to decline,” adds Crosthwaite. “Dealers had been unable to increase retail prices, margins had declined and, in some instances, over-age stock re-emerged as an issue.”
These factors have put pressure on most areas of the market, including prestige-badged models. “The growing volume of late-plate product has had an impact on used-car values, and this could be an ongoing issue. Late-plate values of some models still appear too close to cost new, and I expect values of these cars will ease back in 2010.”
Crosthwaite says the cars that have fallen most in the prestige segment in early November are the volume-selling variants from the most popular ranges, along with all cabriolets. Not all segments have been hit, with many 4x4s still holding up well, along with certain luxury saloons and sports coupes.
“I would be surprised if we didn’t revert back to patterns of business akin to 2006 and 2007, with values dropping an average of two to three per cent per month until we see a rise in demand from mid-January through to spring,” adds Crosthwaite. “The key difference between then and now is that there will be less trade supply and lower retail demand, but dealers are now much better at retaining profit margins based on faster stock turn.”
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