Used car price experts CAP, publishers of the Black Book, have predicted used car trade values will continue to rise over the coming month.
The predicted rise in used car trade values will hit profitability say CAP, and dealer margins will also be hit by a reduction in stock availability, increasingly forcing dealers to buy cars requiring more investment in refurbishing to retail standard.
Dealers are already being forced to pay higher prices for stock in advance of an anticipated shortage of used cars, despite wrestling with slow retail sales and low consumer confidence. The shortage of stock is a hangover from the slowdown in new car registrations in 2009.
CAP Black Book Editor Mark Bulmer painted a bleak picture saying, "Consumers are not banging on the doors to spend their money."
CAP Black Book, used by many used motor dealers, believes the current climate sets the scene for possible business failures due to tougher competition and rising overheads.
"We expect to see significantly less volume as this month wears on," said Bulmer, "The response to this among dealers is likely to be to purchase stock speculatively, rather than for order. Although not unheard of, it has also been noticeable that dealers within the same group are frequently bidding against each other to avoid being left short of forecourt offerings.
