black book editorial April 2016 New Car Sales Used Cars Retail Auction Activity

Transcription

1 April 2016 black book editorial New Car Sales As reported by the SMMT, new car registrations in February continued the positive theme so far for 2016, posting an 8.4 increase over the same month last year, with 83,395 cars registered; this was the largest February since Year-to-date registrations were up 4.7 compared to the first 2 months of Private registrations continued to drive the increases, with 37,666 cars registered, an increase of For consumers taking a car on a PCP, maybe the new plate is not such a financial draw as it once was. Fleet and Business registrations were actually lower this year than last, at 45,729, a reduction of 1.1. Daily Rental volumes in February were one of the main drivers of the decrease in fleet registrations, as they were down some 22.7 compared to February This was driven mainly by Vauxhall and Volkswagen dramatically reducing their volumes in the month, a continuation of a similar picture in January, but off the back of a plentiful December. March is likely to take up much of the overall shortfall, with all major manufacturers likely to be proactive. Mercedes-Benz and Nissan continued to perform some way ahead of the same period last year and it will be interesting to see what impact this has on future used car values when these cars enter the remarketing arena. According to information received by cap hpi, pre-registration, or tactical, activity has been fairly light year-to-date, due in part to some heavy volumes at the end of This is certainly likely to change during the final few days of March. Over one third of franchise dealers questioned reported that pre-registrations were likely to make up over 16 of the total in the first quarter of 2016, with some attractive bonus payments reportedly available for large over-achievement of targets. Used Cars Retail The used car retail market remained buoyant during March. Half of all dealers responding to cap hpi s monthly survey reported that physical footfall had increased over the previous month, however, almost one quarter did state a worsening position, with the remainder stating parity. The numbers were similar with regards to online activity again half of all dealers responding stated that enquiry levels had increased compared to February. Auction Activity Volumes of cars finding their way into the auction halls stayed largely stable during the first half of March, closely aligned with where they were at the same point last year. Part-exchanges and fleet returns generated by the new plate month slowly started to materialise in numbers from around the third week. One factor to take into account, however, is that franchise dealers tend not to trade the desirable part-exchanges they receive, particularly prime PCP returns. These are placed straight onto the forecourts as they can be a relatively lucrative revenue stream when retailed, so they do not appear in the wholesale market. Auction conversion rates remained healthy as expected, generally being in excess of 75, with supply and demand well matched, largely due to the previously mentioned retail demand, with dealer groups, independents and supermarkets alike having a need to replenish stocks. Even some franchise dealers remained actively buying used cars, due in part to the lack of pre-registration activity so far this year. This did vary though, depending on the brand they represented.

2 Analysis of data received by cap hpi showed a 14 increase in cars sold through auction, compared to the same number of working days in March 2015, illustrating the strength of the used car market this year, as well as the fact that auctions remain a popular way of buying and selling used cars. Used Cars Trade Supply and demand have been well matched in the used car market in Whilst volumes have naturally increased, due to registration growth since 2012, consumers and therefore the trade have been actively buying. According to data received by cap hpi, the number of used cars sold so far this year is up 7.7 on the same period in The increased volume of vehicles are finding homes. On the whole, trade values have been very stable since the turn of the year, with average reductions in black book live being less than 1 and in the case of City Cars (examples include the Volkswagen Up, Fiat Panda and Citroen C1), values have actually been on the increase. This theme continued during March, although there were some very early signs of some prices tailing off slightly in the week leading up to Easter. Looking at the City Car sector in more detail, values in 2015 were particularly adversely affected, as we highlighted at the time. This was due to increased volumes in the marketplace, with the number of individual sold trade records received by cap hpi doubling for this sector over a 5-year period, plus pressure from new car deals, particularly PCPs. Pre-registration activity was also plentiful for these smaller cars. As a result, comparing a 3-year old car with 60,000 miles at the end of 2014 to the end of 2015 showed a reduction in value of around 15. Compare this to the Lower Medium Sector, where values dropped by around 5.5, and you can see the pressure these smaller cars were under. However, in 2016 many of these models have had a modest recovery. Whilst there is still pressure due to volume, new car prices and pre-registrations, the previous rate of value drops was unsustainable, as many of these cars now look good value for money. As a result, they have actually been rising in value by around 3 on average since the turn of the year. One side-effect of the strong overall trade values since early January has been a compression of dealer margins, plus early signs of a reluctance by some to pay the high prices in the market, as the consumer is unwilling to swallow increased forecourt prices. Almost 40 of survey respondents claimed that margins had reduced from the previous month, with a similar number stating parity. 20 did advise that margins had increased however, but this number was certainly lower than in previous surveys. With the market generally being stable, it is important to note that there were variances with different mainstream models in black book live, even those within the same sector. As always, selling prices are driven by supply and demand and as a result we saw some value drops for models such as the latest BMW 1 Series, Ford Focus and Peugeot 308, whereas the latest Golfs, Volvo V40s and Renault Meganes performed much better and values increased, reflecting prices seen in the open market. What Next? Easter tends to form a watershed for the used car market. Volumes increase, due to March new car activity generating partexchanges and fleet returns, just as the school holiday period often leads to reduced engagement from the buying public. As a result, supply and demand dynamics come into play and those trade buyers that do remain active have more choice and less competition. As a result, prices are likely to fall. Last year the black book live cumulative movement during the month of April was a drop of 1.7 at the 3-years, 60,000 mile point. Many models reacted differently to each other during this time however.

3 Due to steady registration increases since 2012, there are now more cars in the used car market than there have been over recent years, plus increased pressure from new car, particularly finance, offers. There will also be an abundance of late-plate cars appearing in the market over the next few months, indeed 16 plates were already being advertised on popular used car websites from the early days of March. Add in the pressure being applied on margins and it all seems to point in the same direction. This negative sentiment, however, does need to be tempered with the fact that retail demand for used cars remains healthy consumers are still actively buying, interest rates are low and the economy remains strong. As more volumes hit the market during the post-easter period, black book live will once again come into its own, tracking prices on a daily basis with the editors making changes to values accordingly. The degree of these changes will be dependent on how strong demand is during that school holiday period as well as supply volumes of particular models in the market. Those manufacturers that have pushed pre-registration and short-cycle volumes over the last few months are likely to have their models more adversely affected. As a final point, a little bit further down the line, in June, there is the unknown quantity of the EU Referendum. This, however, is unlikely to have any impact on used values and in the longer term we do not envisage any significant impact, whatever the outcome of the referendum, although there is potential for changes to the overall economic situation. black book April Average Value Movements 1 yr/10k 3 yr/60k 5 yr/80k City Car Supermini (0.1) 0.2 (0.3) Lower Medium (0.2) Upper Medium (0.2) Executive Large Executive (0.6) (0.3) 0.4 MPV (0.1) (0.1) (0.3) SUV (0.8) (0.8) (0.9) Electric (1.2) (2.0) (4.2) Convertible Coupe Cabriolet Sports Luxury Executive (1.7) (1.7) (1.3) Supercar (0.8) Average Movement (0.2) ( ) Denotes negative percentages

4 Market Sentiment by Sector FIAT 500 (08- ) FORD KA (09- ) CITROEN C1 (09-14) TOYOTA AYGO (09-14) PEUGEOT 107 (08-14) City Car: Values in this sector stayed strong throughout March, especially at the 3 and 5-year points. The 1-year 20k mile average value also increased, albeit by a lower amount, despite attractive new car deals, including PCPs, still being prevalent, particularly on this size of car. Values in this sector were hit hard in 2015, declining by 14.7 on average at 3- years 60k miles. This year so far, however, values have been increasing consistently. Disposal volumes have remained fairly stable compared to the same period last year, which has helped this sector in an overall growing market. Some notable performers in March were the Peugeot 107 (08-14) which saw the Active and Allure [2012] models perform well in the current open market and values rise in black book live. The Citroen C1 (09-14) also saw values rise with the Edition models moving up even further to reflect a strong price performance. FORD FIESTA (08- ) VAUXHALL CORSA (11-15) VAUXHALL CORSA (06-11) FORD FIESTA (08- ) DIESEL PEUGEOT 208 (12- ) Supermini: The supermini sector continued to be at the forefront of buyer s activity; demand from retailers continued unabated throughout March. Overall, this sector has seen values rise at the 3-year 60k mile point, such has been the retail demand. Even in a strong used car market some models will inevitably underperform and on this occasion is seems that low mileage, nearly new models in the marketplace are more readily available in some model ranges, such as the Hyundai i20 (14- ) and Skoda Fabia (14- ) amongst others. Retailers are still selling them well but are under no pressure to look for additional stock of that age of vehicle. Auctions continued to see strong conversion ratios helping to keep vehicles selling as quickly as possible. The short-term outlook is that franchised dealers will reach the usual high stock levels for this time of year and will continue to push unwanted part-exchanges to the auction arena. Independents will then be able to select the best stock at the right prices. However, This position may still be some days away and will be monitored closely through black book live. VAUXHALL ASTRA (09- ) FORD FOCUS (11- ) FORD FOCUS (11- ) DIESEL VAUXHALL ASTRA (09- ) DIESEL VOLKSWAGEN GOLF (09-14) DIESEL Lower Medium: Overall values remained relativity level throughout the month with supply matching demand, however, as always not everything has stayed stable. Of the volume models, we have seen most derivatives within the BMW 1 Series (11- ) Diesel and Peugeot 308 (13- ) Diesel ranges reduce while the majority of Volkswagen Golf (13- ) Diesel and Volvo V40 (12- ) Diesels have performed well and in turn values have been rewarded. Another notable performance was the Ford Focus (11- ) 2014 facelift model as it continued to struggle to find its place in the market, due to the high levels of nearly new cars currently readily available values were reduced in black book live. We also saw a notable increase in volume of the Vauxhall Astra (15- ) petrol and diesel variants being advertised on used retail sites at very competitive prices when compared to cap clean; this resulted in these models being moved back in value. The table sees a reshuffle of the top 5, with the Vauxhall Astra (09-) moving to the top spot and Ford Focus (11-) Diesel dropping down to 3rd.

5 VAUXHALL INSIGNIA (09-13) DIESEL BMW 3 SERIES (12- ) DIESEL VOLKSWAGEN PASSAT (11-15) DIESEL MERC C CLASS (11-14) DIESEL VAUXHALL INSIGNIA (13- ) DIESEL Upper Medium: Trade buyer s appetite for these cars remained constant throughout March and there was no shortage of stock available to them. This resulted in an overall stable outcome and at times during March some strong money was paid for certain cars meaning some saw a lift in their values. A car that saw a positive outcome for the second month in a row was the Volkswagen Passat (11-15) Diesel which saw a lift of around 2, similar to the previous month; all other cars shown in the table saw values remain level. Vauxhall Insignia (13- ) Diesel is now shown in the top 5 as larger numbers of these have been appearing in the open market at auction, many on 14/14 plates. During March, older cars over 100,000 miles continued to underperform as preparation costs for getting these cars to a retail standard can prove expensive and customer demand is low, unless they are competitively priced. PEUGEOT 3008 (09- ) DIESEL VAUXHALL ZAFIRA (05-15) DIESEL VAUXHALL ZAFIRA (05-15) FORD B-MAX (12- ) FORD C-MAX (10- ) DIESEL MPV: The MPV sector continued to see the usual amount of stock for the time of year and demand from buyers in the auction halls was positive throughout March. At this time of the year larger than normal levels of high mileage vehicles are usually offered for sale and this year has been no exception. However, these vehicles seem to have sold quickly but at weaker than expected values, as vendors make sure they keep the stock moving and conversions rates high. Some older model ranges have seen depreciation rates adjusted to reflect the weak performance, including these higher mileage vehicles. Some late-plated cars with low mileage also proved to be less popular. Whilst typical 3-year old models in good condition and sensible mileage have in some instances over-performed and values have risen, reflecting a strong desire for ready-to-retail vehicles in this sector. BMW 5 SERIES (10-13) DIESEL MERC E CLASS (09-13) DIESEL AUDI A6 (11- ) DIESEL JAGUAR XF (11-15) DIESEL JAGUAR XF (08-11) DIESEL Executive: Overall, this sector saw values rise in black book live during March. Executive cars struggled slightly more than the norm in 2015 and overall came down around 6 at 3-years 60k miles. This year so far, values have risen in both January and March with only a slight dip in February. Trade sales data showed volume had increased marginally from the same period last year, pointing towards strong supply being more than matched by demand. Early part-exchanges from the new plate only filtered through at a steady pace which also helped retain these strong values. Some notable performers were the Audi A5 Coupe (11- ) which saw values rise, however, the 2.0 TFSI [211] did not perform quite as well and values remained level overall. The Audi A6 (04-09) saw a relatively flat performance, however, the Le Mans model saw a strong market performance and values moved up to reflect. The Jaguar XF (08-11), Merc E Class (13- ) and 6 Series Coupe (11- ) all moved down to reflect a slightly worse market performance than during the previous month.

6 NISSAN QASHQAI (10-14) DIESEL KIA SPORTAGE (10- ) DIESEL NISSAN JUKE (10- ) NISSAN QASHQAI (10-14) VAUXHALL MOKKA (12- ) SUV: As is usual for the time of year, values for this sector started to come under pressure due to a general fall in 4x4 demand and an increase in overall stock availability. Many dealers change their stocking profile to suit the season, although consumers do buy SUVs as a lifestyle choice more and more now. Many dealers still increase their stocking lines of this sector during the autumn and winter months and dispose of them when the weather improves. So, as you would expect, it is the larger more weather-capable offerings that weaken first, Range Rover Sport (09-13) Diesel, Mercedes M Class (12-15) Diesel and Mitsubishi Shogun (10- ) Diesel are examples of some cars that have fallen in value more than the sector average. If the traditional pattern continues you can expect further steady downward movements overall until October time. MINI CONVERTIBLE (10-15) FIAT 500C (09- ) BMW 1 SERIES CONVERTIBLE (08-13) DIESEL MINI ROADSTER (12-15) BMW Z4 ROADSTER (09- ) Convertible: As is typical for this time of year, cars in this sector continued to increase in value based on seasonal change. This upward movement has been relatively consistent, however, there were a few exceptions, mainly associated with some late-plate cars. The s table has seen a few changes in position and is mainly dominated by BMW/Mini, but this is no surprise as they are one of the manufacturers who wisely take advantage of the seasonal uplift by having dedicated convertible sales at this time of year, releasing cars from storage which have been de-fleeted during the winter months. With the exception of the Mini Roadster (12-15) all the cars in this table received a suitable uplift in value, reflecting the strong demand currently associated with this sector. Although one might expect a slight softening due to an overall volume increase expected from the March part exchanges entering the market. It is likely this sector will remain relatively strong for at least the next couple of months. AUDI TT (06-14) AUDI TT (08-14) DIESEL PEUGEOT RCZ (10-15) BMW M5 (11- ) AUDI TT (14- ) Sports: A stable month which sees little change for this sector overall, as demand closely matched supply in the market. By comparison to some of the other sectors choice remained limited, helping to keep prices relatively stable, however, if the volume of supply for the whole market increases because of part-exchange supply in the coming weeks then it is likely to be the table cars which may soften a little. We would expect most other ranges in this sector to remain relatively stable as most have been for a few months now. One car which has made a comeback during March is the Audi TT (14- ), seen in 5th position in our table, where supply has decreased, allowing this car to strengthen in value, offsetting some of the decreases experienced earlier in this year.

7 Notable Movers 3yr 60k Generation Name Min Max Avg BMW X3 (10- ) DIESEL LAND ROVER RANGE ROVER EVOQUE (11- ) DIESEL LAND ROVER FREELANDER (10-14) DIESEL BMW 1 SERIES (11- ) DIESEL KIA SPORTAGE (10- ) DIESEL VAUXHALL ZAFIRA (05-15) BMW MINI COUNTRYMAN (10- ) DIESEL VAUXHALL CORSA (11-15) VOLKSWAGEN POLO (09- ) PEUGEOT 208 (12- ) AUDI A3 (12- ) DIESEL TOYOTA YARIS (11- ) HONDA JAZZ (08-15) VOLKSWAGEN UP (12- ) AUDI A4 (12-15) DIESEL JAGUAR XF (11-15) DIESEL AUDI A6 (11- ) DIESEL VOLKSWAGEN PASSAT (11-15) DIESEL FORD MONDEO (10-15) DIESEL VOLVO V40 (12- ) DIESEL