14/06/2010

It has come as a bit of a shock to some but seasonality has now kicked in. After an incredible period of strength for used car values over the past 18 months, retail business on used seems to have fallen between 10 and 25% depending on dealer and franchise, which has had an inevitable knock on effect for values. Nothing untoward, it's just summer and with peak holiday season to come and a world cup in motion, cars slip off most people's buying agendas June to August.

We have short memories as it's only that one crazy summer last year that bucked the usual seasonal trends. This was due to two main factors. The first was the period of savage depreciation we suffered in 2008 which meant that used car values were historically low and the second was a feeding frenzy brought about by a lack of availability, in part due to lower new car registrations and leasing extensions. Prior to this, most years conform to January - May as the period of maximum strength and then June - December sees harder falls (with some fleeting strength in September).

I think a return to seasonality is a healthy thing. Values had no doubt got ahead of themselves and, although prestige values look like falling in the region of 2.5-3% for the next Guide, this is no harder than a normal June - July movement. I think there is a good chance the remainder of the year may now conform to this seasonal pattern and, with new car price rises from most manufacturers in the sector, this should make used cars look value for money again soon enough.

Two areas are still showing some strength, cabiolets/roadsters (although not as strong as last month) and the late plate in general. Demand here is stronger than other areas and falls for next month are lighter at the 6-12 month age profile. As demand has fallen away, it is only the very best examples in the open market that are being actively sought - one owner cars, lower than average mileage and with the right spec with little or no refurb needed can and do still make strong money. However the "almost" car is now behind book and the "average in all categories" model lags behind somewhat.



Richard Crosthwaite
Prestige Car Editor
Glass's Information Services Ltd.
richard.crosthwaite@eurotaxglass.co.uk