There may be trouble ahead

Cap is predicting a challenging year for the industry as volumes in the used car marketplace continue to rise.

Derren Martin, senior editor at cap Black Book, said, ‘Stability in the market will rest on strong retail demand. The record levels of new registrations in 2015 were preceded by three strong years of growth, following the recession.

‘It is clear that cheap finance is a key factor in strong consumer demand, and while low interest rates help to fund these deals, strong resale values are vital to maintaining low monthly payments.

‘We are predicting there will be more pressure on used prices during 2016 than there has been over the last 12 months.”

The Society of Motor Manufacturers and Traders reported 2.63 million new vehicles were registered in 2015, up about six per cent on 2014 and the fourth consecutive year of growth.

Martin said, ‘The challenge for retailers, and the industry as a whole, surrounds how many of these registrations were actually as a result of natural demand. Fleet registrations are likely to have been heavily incentivised and pre-registrations appear to have been at unprecedented levels throughout 2015.

‘With volumes increasing, the challenge for the industry is to match used car supply with demand without distressing prices.’