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REMARKETING: Auction values enjoy seasonal spring as weather plays its part

Date: 18 May 2010

BusinessCar takes a look at how the auction hall is treating different sectors of the used market, and how factors such as time of year and buyer trends can hit the values of different types of vehicle. Rachel Burgess reports

The first quarter of 2010 has seen a resurgence in 4x4 values across all brands, no doubt driven by the extended spell of bad weather nationwide.

Daren Wiseman, Manheim Auctions valuation services general manager, says the attraction of 4x4s was also driven by some very realistic values that had not fully recovered from their steep decline through 2008 and 2009.

"The industry sentiment is that 4x4 values should remain more stable this year than recent history and consumers seem to be more comfortable on the running costs in exchange for the benefits of being able to travel during prolonged periods of bad weather," adds Wiseman.

While large 4x4s have peaked, says Mike Hind, Cap communications manager, they still remains 30% less expensive than 12 months ago.

He predicts this surge has now ended and rising fuel prices and increasing road fund license costs will probably put growing pressure once again on the 4x4 sector.

BCA communications director Tony Gannon echoes this opinion: "Demand for 4x4s has made the transition from the sub-zero temperature of January and February into March, but it would be surprising if that was maintained as the weather gets warmer and with the latest fuel price rises."

Convertibles have been another popular choice this year according to Hind with a real boost in demand for both hard and tin tops. BCA figures demonstrate this with convertibles and estates showing the biggest monthly climb of 11% or more in March in the three- to five-years old sector.

Gannon says: "In April the market for convertibles has been very active with demand outstripping supply in a number of high-profile sales at BCA on behalf of Lex Autolease."

Unsurprisingly, the used car market is seeing an increasing demand for fuel-efficient vehicles.

Tim Bowden, head of operations at Hitachi Capital Vehicle Solutions, says: "People are becoming far more environmentally conscious, which is hardly a great surprise when you consider the rising fuel prices and tax benefits associated with running green vehicles."


The hot topic of downsizing vehicles is largely redundant in the remarketing sector: "Downsizing has not become a major issue with model mix at auction remaining reasonably consistent year-on-year," says Wiseman.

"What has been noted by vendors is the appetite of consumers to cut the size of the family fleet - instead of having the running costs of four vehicles, many are reducing the personal fleet to two or three vehicles.

He adds: "Consumers are most definitely willing to explore some of the new mini segments that have arisen as an alternative to the traditional hatchback. Many of those vehicles fall in between more traditional industry vehicles segments such as mini-MPVs - five-seat vehicles like the Toyota Yaris, Renault Modus, Skoda Roomster, which have the appearance of a MPV but still only carry five people."

Hind says: "The notion of downsizing as a constant trend is something of a myth in the used car market. Smaller cars always tend to be most favoured in a sector where economy is of paramount importance and this is nothing new.

"What has gone on over recent years is that manufacturers have created the city car sector, which has attracted buyers from the supermini segment. But they have also increased the size and specification of superminis and lower medium offerings, making these more attractive as a main family vehicle."

Moving forward, the most popular cars will be those offering perceived best value and economical motoring, predicts Hitachi's Bowden.

"The premium brands - Audi, BMW and VW- will continue to be popular, especially the low-emission derivatives, as long as the price premium is not too much higher than traditional, well-specified, family cars from the likes of Vauxhall, Ford and Peugeot."

The near future

Gannon adds that early indications for the coming months present a mixed picture. Actual prices in the contract hire and lease sector have continued on an upward trend, but this seems to be driven by a richer mix of vehicles as evidenced by a steep rise in CAP values.

"Both values and CAP performance have fallen in the part-exchange and finance sectors, suggesting an overall softening in market conditions and reflecting an increase in supply and a post-Easter weakening in demand."

Gannon says this trend is consistent with normal seasonal movements and is no cause for alarm.

Fleet decision makers, as ever, need to be conscious of the used car buyer's requirement for practicality and economy says Hind.

Bowden concludes: "Fleet managers should always bear these factors in mind when making their vehicle choices, but ultimately the most important factor, to stand any chance of selling the car on at a premium price in the competitive used car market, is to select the correct specification and options at the time of ordering. Options like satellite navigation and Bluetooth are nowadays becoming as important and desirable as air conditioning."

Residual values - sector by sector

According to figures from KwikCarcost, executive cars have the strongest average RVs in the 10 sectors charted here (see tables) at 36.1%. At the other end of the scale are mini-MPVs with average RVs of 29.0%. The lower medium segment has the largest range of values with its lowest at 15.8%, the Chevrolet Lacetti SX 1.6 5dr (pictured top), compared with the VW Scirocco TSI 122 3dr 1.4T at 48.5%.

The highest RV in these tables falls to the supermini sector with the Mini Cooper Convertible 1.6-litre at 51.7% (pictured above). This is more than double the lowest RV for the class, the Ford Fusion Style+ 1.4-litre (23.6%). VWs typically hold their value well (see 'lower medium' table) but suffer in the luxury segment (see 'luxury' table).