2015 Q1 Used Cars UK Market Trends
Ford Concentrate remains one of the most popular cars for used car buyers.
March turned out to be a positive month for dealers in both the fresh and used car markets. Registrations of fresh cars rose 6% to 492,774 units, the 37th consecutive month of growth and the best March spectacle since the twice-yearly number plate switches were introduced in 1999. Year to date the market is ahead 6.8% to 734,588 units, according to figures from the SMMT.
March was driven by fleet registrations, which rose 11.6%, reflecting growing business confidence in the UK economy. Year to date fleet sales are ahead 14.6%. Private sales rose Two.7% for the month and are just 1.1% ahead in Q1. The retail market has been powered over the past eighteen months by strong finance deals, the phenomenal growth of PCPs, which showcase no signs of abatement, and ultra-low interest rates.
Dealers have voiced concerns, however, that the market is being coerced with more pre-registered cars in order to meet enhanced Q1 manufacturer targets.
In the used car market interest from consumers was also high in the plate-change month, as evidenced by an increase in utter page advert views on Auto Trader.
Utter page advert views are significant as they display real intent on the part of consumers as they click through to get more detailed information on cars.
Rather than witnessing the March spectacle in isolation it’s helpful to look back over the past few months to see how the market performed and see where it is going. In January there were two hundred fifty three million utter page views, 32% up on the previous month.
The increase was generated in part by a TV advertising campaign backed by online movie content, a YouTube takeover and social media activity. The aim of the campaign was to thrust more buyers to the website after the traditional quiet December period.
In February utter page advert views fell back 1.5% to two hundred forty nine million but the overall figure rose again in March by 6.8% to two hundred sixty six million total views. And what were potential buyers looking at? Not remarkably, in terms of views, Ford took the top two positions with its Concentrate and Fiesta models followed by the Vauxhall Corsa, BMW three Series and Volkswagen Golf. The other five models in the top ten were the Vauxhall Astra, BMW 1-Series, Mercedes-Benz C-Class, Renault Clio and Volkswagen Polo.
Gold is in request, attracting a lot of interest from potential buyers
Once buyers find the car they want they then look to see how they will finance the car. Online calculators now feature on 15% of dealer websites, according to Auto Trader research and 45% of dealers who do not have calculators are looking to feature them in the future, along with information on different forms of finance, Individual Contract Plans (PCP) and Hire Purchase (HP) for example.
Dealers are watching growing sales of used cars on PCPs and request is set to increase. According to the Finance & Leasing Association (FLA), in two thousand fourteen PCPs accounted for 33% of finance on used cars worth £3.5bn compared to 25% worth £2.3bn in 2013.
John Hughes, a director with broker Mann Island, sees the market for used PCPs growing further in 2015.
“The sweet spot is in the up to four-year age range. PCP can be particularly significant in helping dealers make nearly-new cars more attractive, which is a key factor in the face of manufacturer support on fresh cars,” he said.
Kirk Franks, head of national sales at ALPHERA Financial Services, also thinks used PCPs are due for growth.
“The market for used PCPs proceeds to grow. Proactive dealers have embraced PCPs, not only as a sales chance but also for the way in which it increases retention.
“A mindset switch is required for dealers to embrace the fact that older one to four year old used vehicles can be sold with a compelling PCP. This product is not limited to pre-registered and nearly-new cars,” he said
As dealers budge through the 2nd quarter of 2015, they are beginning to see where the fresh and used car markets are going. And it’s looking good.
Neil Marshall, automotive analyst at Deloitte, thinks the fresh car sales in March was “quite an achievement” and thinks there is more to come, which is also good for the used car sector with more part-exchanges coming to market.
He also points to a shift in the mix of cars being bought by consumers. Petrol sales are now growing at twice the rate of diesels and this will have an influence on the used car sector further down the line.
“It is also worth noting that the possible confinements on diesel vehicles, combined with lower petrol prices, may be having an influence. Whilst in March two thousand fourteen the increase in diesel cars was numerically greater than the growth in petrol ones, growth in petrol vehicles last month was dual the increase in diesel sales.”
John Leech, head of automotive for KPMG is also upbeat about prospects for the fresh car market and by extension the used car sector with more cars coming in the market as trade-ins.
“In our view, fresh car sales will strengthen further in two thousand fifteen as consumer confidence proceeds to rise. The industry proceeds to support the market with attractive consumer finance packages and two thousand fifteen is witnessing enlargening fresh car sales from consumers who bought cars on finance deals three years ago.
“Sterling has recovered harshly half the value it lost during 2008/9 and if it rises further this could make fresh car prices even cheaper, further bolstering the market. We remain certain that two thousand fifteen sales will grow by four percent to Two.58 million units.
One inescapable consequence of fatter volumes of cars churning through the wholesale sector is growth in the number of poor quality vehicles needing work before they go on sale in showrooms. The positive side is that there are also more three-year old PCP cars coming to market, enriching the mix and suggesting dealers and consumers greater choice. These models tend to have higher specifications and prove attractive to buyers in the used car market.
Corsa is an in-demand car, according to Auto Trader research of traffic
Today, most car buyers research extensively online before they visit a retailer forecourt. By the time they arrive on site, they know exactly what car they want as well as a little about the retailer from which they intend to buy.
None of this will come as news to Motor Trader readers. The stir away from engagement on the forecourt to online decision making is well documented and it’s why we encourage you to think and lead with your digital forecourt.
But while we have been encouraging you to adapt, buyers have been sending a clear message to us too: slick the online journey, make my research lighter and help me find my next car quickly and painlessly.
Expectations are high and patience is low. Everyone wants to get everything they need in one place, with as little hassle as possible. No one wants to visit numerous sites to find the right car – or to response questions like ‘how much is it worth?
Helping consumers with valuations has become a concentrate for Auto Trader and a fresh consumer valuation instrument is being used by more than a million site visitors a month.
Gone is the need to guesstimate values based on crude comparisons with equivalent models on site or to leave the site entirely, to find a less accurate valuation provider. Consumer valuations are helping today’s requiring car buyers.
But they also have the effect of aligning expectations of buyers with sellers. When they arrive on a forecourt, as more than 50% of buyers now do before opening a dialogue, the beginning point for a conversation with you is more constructive – and more realistic.