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Should Dealers Be Looking For Three-year-old Ex-PCP Stock?

Dealers might be thinking of modernising their stock to reflect the boom in three-year-old models coming back from their PCP packages from the record year of 2016, analysts have said.

Car sales portal, CarGurus, has said there will be a renewed focus on 36-month old cars returning to the trade now at the end of a typical finance deal and their attractive prices could be tempting to new customers. More dealers are sourcing them to put in their showrooms and on forecourts to meet current demand. With a market high of 2.7 million new cars registered in 2016, there is plenty available.

It says that the number of 2016 cars it lists has more than doubled since 2016 with an increase of almost 140%.

Chris Knapman, Editor of CarGurus UK, said:

“While 2016 proved to be the year of the new car, 2019 could be very much the year of the used car with a vast swathe of ex-finance contract vehicles heading back into dealer stock. Buying a three-year-old car now makes sense as there will be a consistent turnover of high-quality vehicles that are being returned or traded in by their original owners at the end of PCP contracts. The bonus of buying ex-finance vehicles is they are often well-maintained with comparatively low mileage because of the finance contract terms and conditions.”

In a separate market analysis by Cox Automotive, dealers report an increase in stock availability in the wholesale market but that may be partly fuelled by franchised retailers and manufacturers forcing through pre-registration cars – the new car market fell for the fifth month running in July – by a drop in buyer demand and fleet renewals, the fact remains that used car dealers have a better choice to stock their businesses with.

Create additional much-needed volumes

In its latest report, Cox said that both average wholesale prices and volumes increased by 5% month-on-month and average mileage eased slightly to 61,463. Dealer part-exchanges also remained stable in July, with an increase of 8% in volume MoM and prices level. There was more optimism amongst fleet wholesale, with both volumes and prices increasing MoM to the highest levels seen in 2019.

Dealer Auction, the trade-to-trade online auction platform, enjoyed its best figures in July, with 8,070 vehicles sold equating to a 6% year-on-year increase on the same month in 2018. It also saw the overall average price fall MoM, down 6.0% to £4,402 from £4,603.

Philip Nothard, Customer Insight and Strategy Director, said:

“From a used car perspective, increased levels of pre-registration product entering the sector will create additional much-needed volumes in the wholesale market. We also anticipate increased fleet disposals, as fleet operators replenish stock fleets.”

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