Archive for February, 2017

News Digest – Winter 2016 Update

Used Marketplace Trade Talk; January Trading Slow to Start

Following the Christmas break, auction houses got into full swing right from the word go in January, with first week sales packed with traders. I say traders and not buyers because many appeared to be there to meet up and chat, rather than buy, as sales performances were generally down on December.

XBG Auction house

Just as the markets finished by the end of the second week of December, so they do not normally start until the second or even third week into January and, that was the case for 2017. But by the second week, buying was taking place, with good, if not strong prices being paid for clean stock.

Volumes Increasing

XBG Supply and DemandBy the close of play just before Christmas, Manheim Auctions said that there was 30% more stock being delivered into their sites than at the same time in December 2015. With a widely expected influx of cars and commercials coming back to the used markets from about Easter 2017 onwards, volume is likely to be a key factor in the markets this year.

It all boils down to the ability of the markets to sell the extra volume which, in turn, of course relies heavily on retail demand at the forecourts.

So the markets could be described as fragile this year, with the supply and demand pendulum about to swing towards supply, away from demand. This will create a hardening of prices, maybe even a decline in average sales values as we head towards the middle of 2017.

2016 Turbulent Year

It has been a strange year for the used markets in 2016, although the overwhelming feature was again a relative lack of stock, especially in the LCV sector.
There was more volume for cars and this did start to have an impact on pricing as the year progressed.

XBG Turbulent 2016

The bigger impact for cars though was the desire of the trade to buy better specified models, such as VW badged cars, as opposed to Ford and Vauxhall. This may well continue into 2017, particularly as much more volume is expected from the fleet car returns.

XBG BrexitBREXIT was thought to be the main culprit for the middle of the year dip in sales and, it probably did create a small vacuum.

Indeed some retailers are still commenting that retail sales have not really got back to pre-May levels, hoping that 2017 will see that market return.

But overall it was another good year for the used markets, with Book prices continuing to rise month on month, albeit by small amounts.

2017 Challenges

The main and immediate challenge for the 2017 used markets will be the expected increase in volumes coming back to market, for both LCV and cars. The book experts are predicting that the volumes really begin to ramp up from April onwards, with the new ‘17’ registrations returns. This will certainly be the case with cars but, with LCV’s the main volumes are expected to increase from summer onwards.

In such a scenario, auction attendance and managing the sale will become extremely important, to understand and play to the buying audience.

Another challenge for 2017 will be the increasing anti-diesel campaign, being waged by environmentalists. It is probably true that diesel output is responsible for premature deaths worldwide, but the challenge is how to stop that happening, given that a huge proportion of vehicles in the UK and Europe run on diesel.

The UK Government recently lost a High Court Appeal against ‘Client Earth’, a company of environmental lawyers. The result is that HM Government will now be forced into drawing up new and punitive tax regimes against diesel models, which is a complete reversal of taxation policy, which has actively favoured diesel vehicles for over 10 years.

In Paris, the mayor has declared a ‘diesel free zone’ by 2020. This is a very tall order, especially in France where diesel vehicles form an even higher percentage of the vehicle parc than in the UK.

XBG Paris Diesel free zone

Just about every vehicle you can see in this image of the Champs Elysee is powered by diesel fuel; how on earth this can change in such a short space of time is difficult to fathom. Nonetheless, many major Cities, including London, are expected to follow the lead and begin the process of banning diesels.

Quite how this will impact our motor industry remains to be seen. Clearly there will now be a shift towards petrol and, probably petrol/hybrid, but this campaign will also help sales of pure electric vehicles, certainly for inner City work.

And maybe we will now see a whole new industry emerge to ‘clean up’ existing diesel engines, with bolt on filters etc.

2017 Trading Predictions

Our predictions for the year are that the first quarter sales will be ok, with traders eager to stock up their forecourts for the new year trading period. With extra volume coming from Easter onwards, we will then see a slow decline in values for the remainder of the year, although trading will still be good right through to the summer recess.
The usual busy last quarter will be there, with good prospects for selling used stock.

All of this will be tempered by the extra volume, which will mean that the trade can select their stock more carefully. Thus heavily damaged vehicles will suffer, to a much greater degree than they have in recent years. Unless the vehicle is especially desirable, such as a Landrover Defender or Transit 350 Tipper, the prices attainable will inevitably be lower due to damage.

XBG 2017 predictions with damage

Retail demand is also clearly key to the used markets success and, currently the jury is out on that one. The retail forecourts remain fragile with only “steady” trading being done, rather than being really busy. If that does not change then this will have a real impact on the markets, especially with all the extra volume.

Damage Recharging

We have, from 1st January amended the manner in which we capture damage costings. From now on, we will note any small damage, but will not charge for it in the costings. Thus only large damage will be costed.

This brings our charging structure into line with the latest BVRLA guidelines, where small car park dents and minor scuffs are acceptable wear and tear.

New Model Updates

New ‘EV’s’ Start to Emerge

Following on from the news that the taxation regime is set to target diesels, a whole new range of electric vehicles are due for launch this and next year.

This year will see Tesla enter the small family car market with the Model 3, although curiously figures suggest that its range will be somewhat less than its bigger brother, at 215 miles. That is still twice the current range of most EV’s though and is a welcome step forward.

XBG Tesla Model 3

The pre-launch images certainly show it as a good looking car with an impression of quality and, with what looks like suicide doors; this is better than the initial thoughts of gull winged doors which are ok, until you try to open them in a garage or car park!!

With a price tag expected to be around £30000, it will be very interesting to see where the residuals will lay, after a 3 year fleet use.

XBG Nissan LeafNissan’s new Leaf is also due later this year, and again the new car is a massive leap forward over the old model.

It looks far more exciting and like a car you’d want to own (in the writer’s view, a lot better looking than Toyota’s dreadful new Prius!).

With an expected extended range, this too looks like a car that has a real future.

Other EV projects already announced include Honda, Kia, Hyundai and, further into the future Jaguar. But mainstream Manufacturers are notably absent at the moment; expect Ford and Vauxhall to enter the fray anytime soon!

Used Market Expectations

There remains, however, some uncertainty about how these cars are going to sell on the used markets although, the pendulum is beginning to swing in their favour. Used buyers will be extremely nervous about battery ownership and running costs and, of course, the range anxiety issues. Even with these new models, 200 miles in real world motoring is not far, so an easy charging infrastructure is essential before these cars even start to sell in volume on the used markets. And even then, many people will opt for the safer bet of a hybrid car, that will do everything in one car, town work and long haul trips.

XBG LVC Electric vansLCV Electric Vans

So where does this leave the electric van market; answer a long way behind.

Apart from the Nissan eNV200 and, from the same stable the Renault Kangoo electric, most other Manufacturers are merely tinkering at the edges, without any mainstream offering.

XBG LVC Electric vans2Well chaps, the time has come to play catchup, and quickly!! With many cities now considering low emission zones and, with at least Paris and London considering outright bans on diesel engines, Manufacturers must surely now be taking the case for EV’s seriously.

It will be interesting to see exactly how the Paris and, maybe London policies come to fruition, because in London at least the authorities have invested an absolute fortune in hybrid diesel/electric buses, most notably the new Routemaster.

There is no way that Leasing Companies would allow TfL to dump these vehicles after such a short lifespan, so London will have to use this stock for a minimum of another 10 years.

XBG London double decker