A new report on used cars has been launched by auction house BCA.
The report has been written by Professor Peter Cooke. It’s called: ‘Recession, Residuals and Used Car Operations’.
Although the report is aimed at industry professionals in both retail and fleet areas, the report highlights strategies for any organisation involved with buying or selling volumes of vehicles under recessionary economic conditions.
In the new report, Cooke, who is Professor for Automotive Management at the University of Buckingham, sets out how he sees the used car market in the next few years.
He believes there will be opportunities for fleet operators who read the used vehicle market well and meet the demands that are coming from motorists – whether these are messages over economy, performance, specification or cost.
The publication contains valuable information for three principal groups:
OEMs: creating acceptable future used cars with desirable options and extras that will be highly valued in the used car market
Leasing companies: forecasting residuals and the alternative channels to market for used cars.
Dealers and used car specialists: repositioning and understanding the fundamental changes in the used car markets and how they might look for market segments to exploit.
For fleet operators, Cooke recommends managers take greater control of the car list – even dictating colour – to maximise values come disposal time.
He believes some fleet operators have forgotten how to specify a car for the used car market. Lease companies are generally ahead of the game. But it’s the fleet managers who are buying outright who have been bowing to driver demands.
Cooke doesn’t recommend moving to a solus badge deal or only allowing one trim level and one colour. But he does recommend regaining control over the choice list. And exercising that control to stop drivers picking low-RV colours or options that don’t add to a car’s value.
Cooke believes those businesses using outright purchase in the current climate could reap the rewards in terms of good RVs in 3-4 years because many fewer new cars are being bought.
This new car supply decrease should mean demand and prices increase in future, as the demand for used cars and affordable personal transport is almost certainly going to grow from current levels.
If the number of new cars going into the market is falling – and predictions suggest this will be the pattern in the immediate future – then used market demand will mean residual values have the potential to increase in coming years.
However, Cooke warns that consumer confidence and finance availability will remain over-riding factors.
Further information
The report is available free of charge to BCA account customers from BCA’s Auction View portal at www.auctionview.co.uk
Alternatively, you can access it from Professor Cooke’s Buckingham University at the Centre for Automotive Management: publications
New report on used cars by Professor Peter Cooke
