Manheim Auctions’ full year round-up of 2008 reveals that average wholesale values of used cars in Britain plummeted by 21% during the year.
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The firm’s latest analysis shows that December’s overall average sale prices fell by a further 3.1% to £5720 compared with November. The full 12 month picture of 2008 shows a worsening situation as the year progressed where average values fell from February’s peak of £7235, by a total of £1515.
A further illustration of the real downturn in prices during the year is shown by the huge fall in the proportion of original new price retained. By December 2008 this had fallen to 33% for a car averaging 39 months and 42,100 miles, against 41% returned in January, for an average of 37 months and 44,400 miles.
Looking specifically at the mainstream fleet sector, values in December were down 3.1% against November to £4711 with 27% of the original cost new price being retained for an average of 43 months and 51,000 miles. This contrasts with average values for fleet vehicles of £5631 and 35% of cost new retained, only 12 months ago. The younger vehicles coming from the manufacturers fell month-on-month by £465 or 4% to £8820 (averaging 14 months and 13,200 miles) and the lower value part-exchanges arising from the dealer sector also fell by £82 or 4.8% (averaging 93 months and 75,000 miles)
However, Manheim said there were wide variations in December across the vehicle segments with some ‘much needed good news’ for the less desirable, larger-engine vehicles which saw average values of certain executive and compact executive models actually rise by between 2% and 6%. This adjustment, against the trend, may just be market recognition of what good value these vehicles now represent, having suffered greater depreciation this year than some of the other more economical vehicle segments.
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By GlobalDataStaying on the positive side, Manheim also reported that whilst overall volumes in its auction halls during December were up by 16% compared with the same period a year ago, conversion rates have remained reasonably steady. Mike Pilkington, Managing Director of Manheim Auctions & Remarketing said, “We all know how tough 2008 has been, particularly in the second half, but we continue to sell cars in a market where there is still reasonable demand. Dealers clearly recognise how important income from used car retailing is to the overall welfare of their businesses and a survey we conducted last month indicated that many are actually stepping up used car activity, rather than cutting back”.
However, Pilkington also expressed a note of caution, “This is good news for the market overall, but we must recognise that prices are likely to remain at the current low levels for some time to come. We are certainly not expecting a significant pick up in used car activity at the beginning of 2009, which is often the case in the first quarter of the year. The market is extremely fragile presently and needs a sustained period of stability, supported by the easing of wholesale and retail credit restrictions, before we will see any material signs of recovery.”
