Black Book EditorialCAP

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1 Black Book EditorialCAP Editorial January 2015 New Car Sales As reported by the SMMT, new car registrations grew for the 33rd consecutive month in November, up 8.0 on the same month last year, recording 172,327 units. Year-to-date, 2,310,237 cars had been registered - an increase of 9.4 and ahead of the 2013 total for the whole year, with one month still to go. The year-on-year percentage growth is split evenly between Fleet and Business and Private registrations. However, in the month of November it was the former that led the way, with growth of over 9 compared to the same month last year, with Private registration growth slowing and being just over 6. The SMMT are forecasting a more stable market in The Used Car Market in 2014 As we close off 2014 it is timely to review the year a year that has been a strong one for the UK automotive industry, not just in new but also in used cars. The scene was set in the first few weeks of the year, with prices staying very stable there was plenty of desirable stock in the auction halls to entice trade buyers who traditionally have a growing appetite for cars in the early part of the year. One exception to the stability was with some premium family-sized cars, where increased ex-fleet volume in the shortcycle market put added pressure on values of certain models. It was particularly apparent both then and now that the condition of cars is of paramount importance. There were, and indeed still are, a large number of cars in Average or Below condition that vendors continue to seek CAP Clean for. When volumes are low, this is not necessarily a huge issue, however when buyers have more choice it can become a problem and conversion rates are affected. Overall, Quarter 1 was a strong one for the market and as retail demand increased, conversion rates improved and Black Book Live values continued to be remarkably stable. During April, Black Book Live reported used car prices under more pressure, as they tend to be around the Easter period, due to Bank Holidays, school holidays and increased volumes from part-exchanges generated by the new registration plate in March (March 2014 saw the highest number of monthly registrations for a decade). Values fell throughout April, May and early June, but arguably not by as much as many expected, and certainly not by as much as in previous years. Part-exchange halls at auction remained a popular place to be as buyers sought out something that was a bit different. Prices started to firm up around the middle of June and Black Book Live reported strength in some values, which continued into July. However, there was some pressure on late-plate values, particularly on smaller cars as they competed with attractive new car PCP offers. Values continued to hold up well throughout Quarter 3 it was the 4th quarter in a row where depreciation levels were lower than in the corresponding quarter of the previous year. It was from mid-october that there was a noticeable change in market conditions. The stability of the previous 9 months had meant that many cars were higher priced than those of a similar age and mileage 12 months earlier. With continued alluring new car offers, increased used car trade supply, retail forecourts being pretty much full and retail demand slowing, prices came under considerable pressure. As a result, through the 2nd half of October and the whole of November, values dropped in Black Book Live at a faster and more severe rate than they had ever done since the daily product was introduced, in May There were some tangible benefits made by those tracking Live values rather than relying on monthly figures.

2 The Used Car Market - December It is safe to say that, with the exception of larger SUVs, there was no recovery in the used car market in December. Buyers remained selective, only replacing sold stock on rare occasions and there were few examples of buyers purchasing for January. Many car supermarkets had already bought what they needed for the back-end of December and early 2015 so were unwilling to purchase more until the retail market picked up and that was never going to be until the seasonal festivities were over. Of dealers surveyed by the CAP Black Book team in mid-december, more than half reported a downturn in both on-line and physical retail enquiries over the previous month not unexpected for the time of year. They also reported a plentiful supply of trade stock available to them should they wish to re-enter the market so supply was outweighing demand. Overall, auction conversion rates remained in the early/mid 60 region, meaning a number of cars remained unsold. Those vendors that did sell needed to be more than realistic about what prices they wished to achieve, and certainly had to take condition into account rather than holding out for CAP Clean, as they may have done in times when supplies were short and demand higher. Interestingly, there have been reports of some buyers purchasing cars with a view to trading them via exactly the same auction in January, obviously banking on prices going up early in the New Year. It remains to be seen whether this will happen they may only be successful if they bought them at below the market value in the first instance. So in summary, values were falling progressively throughout December following on from a similar picture in November. As for the previous two Januarys since the introduction of Black Book Live, the movement going into the month is purely reflective of used sales prices in December. There is no forecast element applied. Any strength or indeed weakness during January will be reflected in the daily figures produced by Black Book Live. Based on the data, the overall Black Book monthly reduction of 2.2 at 3 years, 60,000 miles for January 2015 is the largest downward movement for the month since 2009 and well down on last January s drop of just 0.7. What Next? Used car stock levels, particularly at auction, are high going into the New Year so even if demand increases, as is likely, there will still be plenty of choice for trade buyers. It remains to be seen whether the usual pent-up demand from the Christmas break will be enough to push prices up early in January. We are inclined to believe that there may be stability rather than increases, but whatever happens, Black Book Live will be reflecting the sales data as soon as it is received. A word of caution needs to be sounded around late-plate values. There is plenty of this stock around and any end of year pre-registration activity by those manufacturers chasing volume, or market-share targets, may well adversely affect values in early It is likely that 2015 will see a return to more normal depreciation, perhaps akin to the years prior to New car registrations increased after lulls between 2009 and 2011, so more used cars will be coming back into the market based off registrations from 2012 onwards. It is by no means a doom and gloom scenario though, just likely to be less benign than the majority of Time will tell. CAP Condition Definitions The CAP Black Book Team has undertaken a comprehensive revision of the CAP Clean, Average and Below definitions. The new descriptions are closely aligned with the previously published ones but are now defined by age. They are available to view at And finally we would like to take this opportunity to wish all of our customers and industry contacts a very happy and extremely prosperous New Year.

3 Black Book January 15 - Plate Uplift Excluded Average Movements 1 yr/10k 3 yr/60k 5 yr/80k City Car (2.1) (2.5) (2.5) Supermini (2.2) (2.4) (1.8) Lower Medium (1.5) (2.0) (2.3) Upper Medium (2.3) (2.8) (2.9) Executive (2.3) (2.6) (2.7) Large Executive (1.3) (1.3) (1.3) MPV (1.4) (1.3) (1.6) SUV (1.2) (0.9) (0.9) Electric (0.2) (0.8) 0.0 Convertible (2.8) (2.8) (2.9) Coupe Cabriolet (3.3) (3.4) (4.5) Sports (1.9) (1.5) (1.8) Luxury Executive (0.1) (0.3) (0.6) Supercar (1.3) (1.0) (0.7) Average Movement (1.9) (2.2) (2.2) ( ) Denotes negative percentages

4 Market Sentiment by Sector FIAT 500 (08- ) CITROEN C1 (09-14) PEUGEOT 107 (08-14) VAUXHALL AGILA (08-14) VOLKSWAGEN UP (12- ) SKODA CITIGO (12- ) City Car: Values in this sector continued to decline due to high volumes and a lack of buyer appetite. The drop in values is more than that of the same month last year, and although it was expected after a stable year, it is an unusual slump going into January. The Highest Trade Sales Volume table sees the Fiat 500 (08- ) move into first place with an increased share of 2.4. The Citroen C1 (09-14) has dropped to second place with a decrease in share of 8 - values dropped due to this low demand. The Peugeot 107 (08-14) remains in third place with an increase in share of 2.9. Notable performers were the Vauxhall Agila (08-14) which saw a decline in values, however, SE models took less of drop as they performed better that the rest of this model line-up. Other notable performers were the Volkswagen Up (12- ) and the Skoda Citygo (12- ) which have both seen a decline in values due to a weakened price performance. FORD FIESTA (08- ) VAUXHALL CORSA (11- ) FORD FIESTA (08- ) DIESEL TOYOTA YARIS (11- ) SEAT IBIZA (12- ) DIESEL SKODA FABIA (10- ) Supermini: It is normal for the retail market to slow at this time of year and December 2014 was no exception. What has been different this time around is the consistently strong supply of stock still entering the used car market and this has been a key contributor to values moving down more than many anticipated. The Highest Trade Sales Volume table sees the Ford Fiesta (08- ) in the top spot and whilst values have moved down, demand has meant it has moved less than the sector average, with the exception of some Ecoboost engines which have struggled. All three model line-ups in the table saw values move down off the back of undiminishing supply. As we enter a new year, cars in this sector will continue to be at the top of retailers shopping lists and demand is expected to be very good. This is not necessarily likely to be reflected in values rising in the short term however, such is the level of current supply. VOLKSWAGEN GOLF (09-14) DIESEL FORD FOCUS (11- ) FORD FOCUS (11- ) DIESEL TOYOTA PRIUS (09- ) HYBRID SEAT LEON (09-13) DIESEL FORD FOCUS (11- ) DIESEL Lower Medium: The Volkswagen Golf (09-14) Diesel ended 2014 as it started, by being at the top of the Highest Trade Sales Volume table. On the whole values softened throughout the month as buyers remained largely disengaged. Manufacturers tried hard to hit year end stock targets and it was evident that a number of the larger ones sold vehicles into the market with large discounts attached. In some instances deals were noted going through for as little as 90 of CAP Clean, which helped contribute to some of the larger Book drops witnessed this sector achieve its highest volume of trade disposals for some time, illustrating that this sector continues to grow. This trend is likely to continue especially when you take into account the buoyancy of the new car market, whether demand matches supply remains to be seen. VAUXHALL INSIGNIA (09-13) DIESEL BMW 3 SERIES (08-12) DIESEL AUDI A4 (08-12) DIESEL VOLKSWAGEN PASSAT CC COUPE (08-12) DIESEL VOLVO V70 (07- ) DIESEL FORD MONDEO (10- ) DIESEL Upper Medium: For the ninth month in a row, the highest volume ranges are Vauxhall Insignia (09-13) Diesel, BMW 3 Series (08-12) Diesel and Audi A4 (08-12) Diesel, these have all seen values decline as this sector weakens again. As in the previous month, it was high volume and low retail activity that resulted in a generally poor trade price performance meaning weakened values for many models. It has been difficult to note much strength in any particular carlines so the Notable CAP Performers are again all models that have seen values decline through the month. Short term, will this sector stabilise? Values have dropped quite significantly over the last two months so this will depend on just how strong retail demand is and whether it is enough to significantly eat into the high levels of supply.

5 VAUXHALL ZAFIRA (05- ) DIESEL PEUGEOT 3008 (09- ) DIESEL NISSAN NOTE (09-13) KIA VENGA (10- ) DIESEL VAUXHALL ZAFIRA (12- ) DIESEL FORD B-MAX (12- ) MPV: In a challenging market this sector seems to have held up better than most. The MPV sector, although not immune from some late plated vehicles being offered for sale in the open market, has not been overwhelmed. Main dealers have continued to buy for stock, particularly low mileage, three year old examples. Independent retailers have also made sure that they have a good stock of vehicles from this sector ready for the start of the year. The highest volume performer with regards to trade sales sees the Vauxhall Zafira (05- ) Diesel once again in first place. The Notable Performers table includes the Kia Venga (10- ) Diesel, which although it has seen values soften, has still outperformed the market. With dealers primed with a good supply of retail vehicles ready for 2015 the anecdotal feedback from retailers is very positive. A strong performance, weather permitting, is eagerly anticipated. BMW 5 SERIES (10-13) DIESEL AUDI A6 (11- ) DIESEL MERC E CLASS (09-13) DIESEL AUDI A6 (11- ) DIESEL BMW 5 SERIES (13- ) DIESEL MERC E CLASS COUPE (09-13) DIESEL Executive: This sector has moved very similarly to last month, but is showing a weaker performance than at this time last year, with stock levels still high and buyer demand still low; this is continuing to adversely affect values. The Highest Trade Sales Volume table sees the BMW 5 Series (10-13) Diesel remain in the top spot with a decline in share of 2.6. The Audi A6 (11- ) Diesel has moved to second place from third last month and sees an increase in share of 2.1. The Merc E Class (09-13) Diesel has moved into third place from second with a decline in share of 4.9. Notable CAP Performers this month are the Audi A6 (11- ) Diesel which has performed well in what is currently a difficult market and has seen a rise in values to reflect this strong price performance. The BMW 5 Series (13- ) Diesel and the Merc E Class Coupe (09-13) Diesel have both seen performance struggle this month - values have reduced to reflect this. NISSAN QASHQAI (10-14) DIESEL KIA SPORTAGE (10- ) DIESEL VOLVO XC60 (08- ) DIESEL VOLVO XC90 (06- ) DIESEL NISSAN X-TRAIL (10-14) DIESEL MITSUBISHI ASX (10- ) SUV: This month is witness to this sector falling on average, more than at the same time last year. There are a few explanations for this, firstly, we are in a market where there is no shortage of vehicles to buy, and alongside this, many people already have sufficient stock so therefore demand is quite low. Another reason is due to what also happened this time last year, in that the harsh winter weather has not yet materialised which is leaving a lot of dealers to catch a cold, so to speak, with many of this sectors offerings. Saying all of this, the sector still performs adequately when considering the volume and if the white stuff hits the ground, things could suddenly improve. A car worthy of a mention this month is the Volvo XC90 (06- ) Diesel which has continued to perform well over the last quarter of 2014 leading into January, possibly off the back of the run up to its well-publicised replacement and no current new model being available, both helping to captivate the market. AUDI A3 CABRIOLET (08-13) DIESEL BMW MINI CONVERTIBLE (10- ) MAZDA MX-5 (09- ) AUDI A5 CABRIOLET (11- ) DIESEL VOLKSWAGEN GOLF CABRIOLET (11- ) DIESEL MAZDA MX-5 COUPE (06-09) Convertible: Even though supply has continued to reduce throughout December, values have continued to weaken to the lowest point of the year; although towards the back end of the month there were some early signs of stability for some ranges within the sector. The Highest Trade Sales Volume table sees the Audi A3 Cabriolet (08-13) and the BMW Mini Convertible (10-) in the top two positions, both which reduced in value. One of the few cars which did escape any downward adjustment was the Audi A5 Cabriolet (11-) Diesel as these cars were in limited volumes. At this point of the year some buyers are now taking advantage of these reduced prices and stocking the odd convertible for the almost inevitable rise in values moving into next year; whether this gamble will pay of as early as January remains to be seen.

6 AUDI TT (06-14) AUDI TT (08-14) DIESEL PEUGEOT RCZ (10- ) DIESEL MERC AMG C CLASS COUPE (11- ) PORSCHE CAYMAN (09-13) JAGUAR XK (09- ) Sports: Another month of downward movement for this sector. The Audi TT (06-14) and the Audi TT (08-14) hold their relative positions in the Highest Trade Sales Volume table with the Peugeot RCZ (10- ) remaining in third position; all of these cars have reduced in value. The Mercedes AMG C Class (11- ) is one of the few cars escaping the recent downturn in values and actually received an uplift in the month, helped by relatively low volumes. Demand for this sector still appears to be weak, and like most sectors appetite for stock remains limited. Notable Movers 3yr 60k Best Performers Generation Name Min Max Avg VOLVO XC90 (06- ) DIESEL AUDI A6 (11- ) DIESEL MERC AMG C CLASS COUPE (11- ) LAND ROVER RANGE ROVER EVOQUE (11- ) TOYOTA PRIUS (09- ) HYBRID AUDI Q7 (09- ) DIESEL TOYOTA LAND CRUISER (09- ) DIESEL TOYOTA RAV4 (10-13) DIESEL NISSAN X-TRAIL (10-14) DIESEL VOLKSWAGEN TIGUAN (11- ) DIESEL Worst Performers Generation Name Min Max Avg JAGUAR XK (09- ) -1, ,092 BMW 5 SERIES (10-13) DIESEL MERC E CLASS COUPE (09-13) AUDI TT (08-14) DIESEL RENAULT MEGANE COUPE CABRIOLET (10- ) BMW 3 SERIES CONVERTIBLE (10-13) DIESEL AUDI A5 CABRIOLET (11- ) BMW X6 (08-14) DIESEL FORD S-MAX (10- ) DIESEL VOLVO V70 (07- ) DIESEL