Brisk business at the car auctions down to short supply

Although the auctions are doing brisk business at present, there is a feeling that this is mainly down to short supply. There is expected to be a flood of cars later in the month as contract hire and lease cars are de-fleeted, meaning more choice and therefore a cooling of prices on the trade market.

Since the end of scrappage the value of small late plate cars is still being affected, the theory being that whilst scrappage was in place buyers could get £2,000 off what was an inexpensive car in the first place. Most buyers who would be interested in the more budget end of the market have probably bought anyway and the ones that are still in the market are not prepared to pay guide prices for these kinds of more basic models, and therefore the stock is proving harder to shift.

Interestingly when speaking to dealers they are telling us that low spec base models, especially 3 door versions, are selling only when the price has been slashed to the bone. With the ongoing economic uncertainty in the country and people still worried about their jobs car buyers want their basic cars at a very basic price.

On the other hand cars with unique selling features and high specification are fetching a large premium in some cases, but this kind of stock is becoming harder and harder to find.

We expect the choice of models on sale to increase slightly in the coming weeks but the underlying trend would still very much mirror the decline in new car sales which, coupled with the VAT rise in January 2011, will certainly point towards dealers having a tough time over the next year or two.