Mercedes-Benz commentary November 2017

Glass's

13 Nov 2017, Blog Post

October’s used car auction market started well, but as the month progressed we saw an increase in volume coupled with a decrease in the first time conversion rate when compared with September. By the end of the month, the overall volume was 4.7% over September, and a sizeable 6.9% higher than October 2016. At 84.6% the first time conversion rate was 3.5% down on September’s admittedly high rate, but 1.2% higher than the same month last year, so overall it could be seen to be a relatively successful month. Mercedes-Benz had a rather mixed month, however – although auction observations were 8.3% lower than for September, their first time conversion rate was down to 78.6%, which was a sizeable 15.9% lower than September’s final figure. In contrast to last month’s SUV dominated table, October’s top 5 performing ranges were rather more mixed:

Best 1st Time Conversion

Position

Range

1st time Conversion

1

SLK

83.6

2

A-Class

83.4

3

B-Class

81.2

4

M-Class

81.1

5

C-Class

80.0

Unsurprisingly, almost every range saw a decline in conversion rate, with the biggest drops being seen for the SUV ranges, which seems somewhat strange for this time of the year.

It seems almost inevitable that sooner or later every manufacturer will launch a new car that breaks with tradition and as a result struggles to achieve the hoped for reception. Examples include the BMW 5GT, the Vauxhall Signum, and the Mercedes-Benz R-Class. The concept behind the R-Class appeared to be sound – a car that combined the attributes of an SUV, MPV, estate car and limo. Unfortunately, some felt that the compromises needed to achieve this blend resulted in a car that was a “Jack of all trades, but master of none”. Demand, both new and used, was relatively low and depreciation was steeper than would have been expected for a Mercedes-Benz of this price and specification level. However, as with cars like the Signum, some found that once they had tried the R-Class, its mix of practicality, versatility and leg room (especially in the LWB version) made it an ideal fit for their lifestyle. As a result, for a few years they have benefitted from the lower used values which made it excellent value for money. However, the secret has got out and values have stabilised and even started to increase as more people have discovered the R-Class’s versatility. This is not too surprising given the current levels of interest in SUVs and crossovers – looking at the concept of the R-Class, it could be seen as being one of the first, if not the first, premium crossovers.

Whilst Mercedes-Benz experienced a rather mixed auction market during October, the retail market showed more promise. Glass’s Live Pricing Data, which measures the length of time vehicles remain on the forecourt, showed that the average days to sell for the general market improved by 2.5 days to an average of 38.5 days. Mercedes-Benz also saw an improvement to its Days to Sell, improving by 1.5 days to 38.9 days which is the shortest average duration for almost 3 years. The range that improved the most was the ML-Class, down by 9.1 days to 33.4 days, although the A-class was the quickest to move during October, with an average of 33.1 days. With an average of 50.6 days the S-Class took the longest to leave the forecourt, although that is not so unusual for a car of this type.

Given the unsold volumes being carried forward into November, the used car market is expected to remain fairly steady. Values are expected to decline a little – not unusual for this time of year – but it is very important that vendors recognise we are in the quieter period and accept that reserves need to be realistic to avoid carrying too much unsold stock into December.

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