Demand for Used Car Stock Set to Remain High

Consumer demand for used cars in the current economic market and a shortage of stock following five years of under 2.5M new car sales is set to create upward pressure on the right quality of used car stock, with notable demand in the 3+category.  This is the latest market forecast from SMA Vehicle Remarketing.

Bob Anderson SMA Group Managing Director reflects, notes;"There is very real competition from buyers for well-prepared used car stock in the current market, indeed auction process rose by 9% in 2011.  This trend is set to continue into 2012 as the impact of lower new car sales over recent years continues to flow through.

"There is undoubted demand for used cars from consumers who continue to face declining levels of disposable income and as a result want to trade down in terms of the car they drive.  However, consumers are very value conscious and are placing real pressure on dealers in terms of retail pricing.

"The result is that buyers in our centres and online are actively seeking forecourt ready stock that they can market quickly, removing refurbishment costs and minimising stocking times.  In the case of the latter there can be little question that the rise in SMA's online sales activity is being largely driven by a desire for 'just in time' stock' with buyers using the internet to select particular stock to fulfil specific customer needs".

On-going demand for used cars reflects falling levels of consumer disposable income and a need/desire to reduce outgoings.  Consumers clearly see a used car as offering better value at a time when money is tight, and whilst consumer mileage fell in 2011, the overall number of used car unit sales stayed steady at between 6.6 and 6.8 million units.  The need for mobility and the continuing rise in UK households points to a continuing slow rise in the value of used cars in the foreseeable future.

The final quarter of 2011 witnessed some real momentum across SMA, it is a trend that the business expects to see continuing in the year ahead.  However, the condition of stock is a major factor in both price and demand.  SMA's own data clearly demonstrating that vehicles reconditioned through SMA's Technical Services operations have typically seen both a price premium and lower level of 'time in stock'.

To meet the needs of what SMA expects will be a continuing steady rise in used car sales in 2012, the business has successfully concluded negotiations with a number of new significant vendor customers, as Bob concludes;

"Whilst GDP may have slipped into the negative in the final quarter of 2011, we are cautiously optimistic for the year ahead.  We have nimble and enthusiastic team and we have demonstrated throughout some very interesting market conditions our capacity to innovate and change, working with vendors and buyers effectively to help both.  There is a demand for used cars, and to ensure they are in the condition buyers want, more and more vendors are taking advantage of our Technical Services team to refurbish their cars and gain a sales premium.