AUCTION prices for ex-fleet cars fell 2% last month and further erosion is expected over the coming weeks, according to the latest monthly market report from the National Association of Motor Auctions (NAMA).
The report shows that during May the average values of used cars sold at auction across the board actually increased from £4,550 to £4,765, equivalent to a 3% increase between April and May.
However in the fleet and dealer part exchange sectors, which accounts for 90% of sales, prices were down 2% and 4% respectively.
Nevertheless, vendors continue to see prices higher than the same month last year with the trend for the year-on-year gains becoming more significant as the year has progressed, according to NAMA.
Fleets have benefited from a 4.5% increase in prices in May this year compared to May last year and dealers a near identical figure of 4.3%. What validates the comparison is the fact that the average ages and mileage on cars in both years were close to the same, said NAMA.
Although overall sales prices increased by 3% last month, the figure was distorted by the larger number of higher value cars supplied by the manufacturer and rental sectors, according to the organisation.
Since the middle of March there has been a gradual and typically seasonal slowdown in trading conditions.
Although there was a 9% increase in sales during May, that was largely due to vendors accepting that market conditions were unlikely to improve anytime soon and therefore it was sensible to accept the best bids being offered. However due to resilient sales prices vendors were not having to accept bids well below the reserve.
Tony Gannon, NAMA committee member, said: ‘The general condition of cars sold in May was worse than the previous month. Due to the natural slowdown in sales over the last couple of months the ‘near ready to retail’ cars are still desirable, but many of the other cars remain unsold and are carried over to the following sale. May sales contained a higher proportion of these carried over vehicles. So even though prices in the fleet and dealer part-exchange sectors were down, the reductions could be explained by the slightly inferior condition.’
Gannon continued: ‘As expected, potential retail customers became distracted by events surrounding the [Queen’s] Diamond Jubilee with dealers enquiry levels falling.
‘However the wholesale market responded strongly in the first week following the double bank holiday. With the European football championships and Olympics upon us it is likely that there will be some further disruption and uncertainty in the coming few months. This will mean that, for the time being, dealers are not likely to have a strong propensity to buy cars for stock.
‘Given that auction inventories are similar to this point last year, it would be logical to expect further erosion in prices until mid to late August. It is important to note that this is nothing unusual as it is a feature of the market most years.’