<img src="//pixel.quantserve.com/pixel/p-3Av9z-yqh-5rv.gif?labels=_fp.event.Default" style="display: none;" border="0" height="1" width="1" alt="Quantcast">
Skip to content

Looking for a Vehicle Valuation or HPI Check?

Looking for a Vehicle Valuation or HPI Check?

Car Market Overview August 2019

Download PDF(Popups must be enabled)
New Car Sales

According to figures produced by the SMMT, the new car market fell for the fourth consecutive month in June, down 4.9% compared to the same month last year, with 223,421 cars registered (234,945 last June). Year-to-date, 1,269,245 cars were registered to the end of the month, down 3.4% on last year’s 1,313,994. The SMMT apportion this drop to confusion over low emission zones and diesel, the removal of key ultra-low emission vehicle incentives and an overall decline in buyer confidence. There were also high volumes posted in the last few days of the month by some manufacturers, pointing to a reliance on tactical registrations to achieve quarterly volume and market share targets.

BBSource: SMMT

Diesel registrations continued to decline, the 27th month in a row that they have done so, making up 26.8% of the market in the month, when last year the share was 31.7% and 43.8% in June 2017. Petrol registrations did increase in the month (share of 67.3%), remaining the main fuel type of choice as diesels decline. Plug-in hybrids dropped by a huge 50.4%, with non-plug in hybrids also falling, by 4.7%. Whilst pure battery electric vehicle registrations did increase, the drop off in both hybrid types meant overall alternatively-fuelled registrations reduced for the first time since April 2017 (reducing by 11.8%). The impact of government legislation on the new car market cannot be ignored.

BB2Source: SMMT

Perhaps somewhat surprisingly, bearing in mind the tactical nature of some of the registrations, Daily Rental volumes actually reduced in June, down 6.6%, compared to the same month last year. Much of this reduction was due to Vauxhall and Volkswagen; both were also down overall with regards to registrations. Year-to-date, Vauxhall have registered more in the rental area than Ford and Mercedes-Benz (in 2nd and 3rd) put together, whilst BMW in 4th have also been active in 2019. It will be interesting to monitor whether there is an impact on values moving forward and which brands are the most affected – certainly, the two more premium brands may have more challenges if there are large volumes of “newer” used cars entering the market; careful management of volumes, holding periods and disposal channels are required.

Used Car Retail Activity

It has been a tough time recently for used car retailers and as publicised in the trade press over the last few weeks, some large dealer groups and car supermarkets have posted significantly reduced profit warnings. Previously high trade purchase prices squeezing margins, along with a recent slowdown in consumer demand have not helped.

The general sentiment in July was that it was proving to be another tough month on the forecourts, with the holiday season not helping, along with a certain degree of economic uncertainty. Higher value cars once again proving to be the toughest to sell. There is the argument, however, that we were actually witnessing a “normal” July, after some stronger performance at this time in recent years. The summer, holiday season inevitably takes some consumers out of the market for a period of time. Somewhat surprisingly, however, according to our research and data, demand did seem to pick up, if only slightly, from around the second week of the month, which actually coincided with some school holiday periods starting.

Overall, there was no discernible change between June and July on how long cars were being advertised for before they were sold, with diesel cars selling quicker than petrol ones still (45 days as opposed to 48).

Used Car Remarketing Activity

With this still relatively subdued retail market, there has inevitably been a knock on to the wholesale arena. Certainly, some dealers have been actively reducing their stock levels, meaning they have had less of an appetite to buy. Supply and demand dynamics dictate that this will likely negatively influence values.

Mirroring the retail market, conversion rates and pricing performance at auction did pick up around the middle of the month, with some slight positivity returning. Fair to say that this has not been completely across the board, however, and the positivity does feel somewhat fragile, with some uncertainty over the political and economic state of the country.

Cars at a reasonable, circa £10,000 price, in good condition with a desirable specification have actually sold quite quickly and at close to cap clean, but anything requiring refurbishment has struggled, and the higher the value this has been more acute. Once again, those vendors using Live values and keeping a close eye on the market, adjusting price expectations accordingly, have sold quicker than those chasing previous monthly values. In a moving market it cannot be stressed strongly enough just how important this is.

So, what does this months’ survey of the auction companies show?

How does trade demand compare to the previous month?

BB3

For the majority, demand in the halls has remained at a similar level to where it was in June and, quite significantly, less respondents saw a drop-off in demand than last time around. The timing of the survey being towards the end of the month will certainly have helped these results err on the side of positivity.

How do your current stock levels compare to the previous month?

BB4Half of all respondents saw their volumes drop in July, a similar result to last month, with only a small minority seeing increased numbers. This is likely to have assisted some of the slowdown in price drops mid-month. 


How do conversion rates compare to the previous month?

BB5

Slightly more respondents than last time around saw conversion rates drop, but we did certainly witness some increases in this metric during the month, albeit slight. As is illustrated by the charts, however, there could hardly be a more inconsistent picture from across the board, with an equal number stating conversion rates had increased and decreased. Consistently inconsistent!

Used Car - Trade Values

Trade values dropped by 2.2% at the 3-year, 60,000 mile point in our Live product during July, significantly more than the seasonal norm, of -1.0%, over the last 5-years, and around -0.5% more than we expected. This is also very similar to last month’s movement, suggesting the same pattern of downward pressure.

The chart below shows the monthly movements (calculated from accumulated Live movements during the month) over the last four years. So far this year, every movement has been more negative than that of the same month in 2017 and 2018.

B7

There was a slight stabilisation around the middle of the month, however, with values still under pressure but not moving by as much as earlier in the month or as in June.

Diesel car values dropped at a slightly higher rate than petrol ones, as they have done during every month this year, but not alarmingly so. As illustrated by the speed to sell in retail, there is still a healthy demand for diesel cars, particularly if a larger vehicle that will be undertaking high mileage is required. With clean air zones appearing there could well be some regional bias on pricing going forward and wholesale vendors would do well to be mindful of this when choosing where to sell – we have already seen the early signs of this in our retail data. In the upper medium sector, there has been a noticeably higher drop in value of diesel cars over the last few weeks, but this does appear to have been driven by volume and an abundance of similarly specified ex-fleet cars. Value drops have generally been more acute in percentage terms the older the cars get, which is for cars registered before the new car market switched dramatically to petrol cars, from early 2017, hence the volume issues.

Looking further into the detail of value drops, the largest drops in Live in July were in the large executive and luxury executive sectors, with both falling out of favour with buyers, due to a reluctance to invest in big-ticket items, unless there is a consumer actually waiting to buy. Drops have averaged over 3% for both sectors, which are significant amounts of around £800 for large executives and over £2,000 for luxury models. Buying for stock has been considered more risky than previously at this top end as cars tend to sell less quickly, thus tying up large sums of money for longer. Some of the models that have taken the largest price reductions are the Audi A8 (both petrol and diesel), Lexus LS Hybrid and the Mercedes-Benz S-Class (petrol, diesel and hybrid variants). A number of Bentleys have also suffered some large reductions.

Electric cars have not been immune to value drops in July, moving back roughly in-line with the overall market. Again, this has been more acute at the top end, with cars of this propulsion being relatively expensive compared to similar petrol and diesel models. Tesla models in particular have seen some reductions of late, not helped by some inconsistent new car pricing affecting the used market. Some notable exceptions, however, were the Hyundai Kona Electric and the Citroen C-Zero, where we have seen strong wholesale performance that has been corroborated by strong retail advertised prices. Low volumes have helped both of these models achieve these price increases.

What Next?

With the holiday season now fully upon us, consumer demand will likely slip away to a certain degree, which will wash through into the wholesale sector, as there will be less of a requirement to replenish stock. However, with the new car market being depressed for the last few months, and July and August relatively low registration months in volume-terms, inevitably lower numbers of part-exchanges will leave supply levels manageable.

The Live movements during August over the last 5-years averaged a drop of just 0.5%, so it is generally a month where prices do not move by large amounts. Bearing in mind, however, that movements over the last few months have been heavier than in recent years, and, whilst there are some signs of recovery, the used car market is certainly not buoyant, it would be safe to expect drops to be in excess of this 0.5%, potentially nearer -1.5%. This should be viewed relatively positively, if it comes to fruition, as it will be the lowest value drop in Live since April.

black book August 2019 - Average Value Movements

 

1 YR/10K

3 YR/60K

5 YR/80K

City Car

(1.8%)

(2.2%)

(2.2%)

Supermini

(2.4%)

(2.4%)

(3.0%)

Lower Medium

(2.0%)

(2.6%)

(3.2%)

Upper Medium

(1.8%)

(2.1%)

(2.5%)

Executive

(2.5%)

(2.0%)

(2.1%)

Large Executive

(4.3%)

(3.3%)

(1.4%)

MPV

(1.7%)

(1.8%)

(2.2%)

SUV

(2.0%)

(2.3%)

(2.7%)

Electric

(2.0%)

(2.1%)

(1.6%)

Convertible

(1.1%)

(0.8%)

(1.3%)

Coupe Cabriolet

(1.1%)

(1.5%)

(1.9%)

Sports

(1.3%)

(1.1%)

(1.6%)

Luxury Executive

(2.2%)

(3.1%)

(3.2%)

Supercar

(0.7%)

(0.9%)

(1.3%)

Overall Avg Book Movement

(2.0%)

(2.2%)

(2.6%)

( ) Denotes negative percentages

Notable Movers 1yr 20k

GENERATION NAME

MIN £

MAX £

AVG £

BMW 3 SERIES (12- ) DIESEL

-750

-350

-529

BMW 6 SERIES GRAN COUPE (12-18) DIESEL

250

300

266

FIAT PANDA (12- )

-300

-150

-215

FORD FOCUS (11-18)

-600

-300

-370

MERC AMG A CLASS (13-18)

600

600

600

NISSAN JUKE (10- )

-650

-275

-453

NISSAN QASHQAI (13-18) DIESEL

-400

-200

-271

TOYOTA C-HR (16- )

150

200

168

VAUXHALL MOKKA (12- )

-400

-300

-343

VOLKSWAGEN GOLF (13- ) DIESEL

-750

-100

-411

Notable Movers 3yr 60k

GENERATION NAME

MIN £

MAX £

AVG £

AUDI Q7 (15- ) DIESEL

-1,650

-550

-1,112

AUDI S3 (13-19)

150

200

158

BMW 1 SERIES (11-17) DIESEL

-425

-175

-299

KIA PICANTO (11-17)

-225

-25

-159

MERC A CLASS (12-18) DIESEL

-825

-150

-281

NISSAN QASHQAI (13-18) DIESEL

-400

-275

-319

RENAULT MEGANE COUPE (09-16) DIESEL

300

325

308

RENAULT MEGANE RENAULTSPORT (10-16)

500

550

533

VAUXHALL CORSA (11-15)

-300

-300

-300

VOLVO XC60 (08-17) DIESEL

-500

-250

-320

PDF Download For Test Editorial
Derren Martin

Derren manages the valuation process for current used car values at cap hpi, which includes managing a team of 6 Car Valuations Editors who analyse around 170,000 individual sold trade records each month from a wide variety of industry sources, plus 700,000 retail adverts that are reviewed daily. Derren and the team also engage in market insight discussions with various auctions, leasing and rental and remarketing companies and vehicle manufacturers throughout the month as well as offering consultancy on the new and used car market. 07436 817 383 Derren.Martin@cap-hpi.com