Mercedes-Benz commentary October 2017

Glass's

10 Oct 2017, Blog Post

The used car auction market for September followed similar trends to August. Volumes were up by 2.0% over September, and 1.0% over September 2016. The first time conversion rate was also up again, to 87.7%, which was 3.2% over last month and 1.9% higher that September 2016. Interestingly, the conversion rates for petrol and diesel have historically been very close, but over the last 11 months the diesel conversion rate has dropped below that for petrol. However, that gap has recently closed and they are now virtually the same again. Mercedes-Benz had quite a busy month in the auction market, with observations up by 55.9% and a first time conversion rate up 4.8%, to 87.4%. Perhaps due to the approach of the colder months, the top 5 performing Mercedes-Benz ranges in September were dominated by SUVs:

Best 1st Time Conversion

Position

Range

1st time Conversion

1

M-Class

97.7

2

GLE Class

95.8

3

GLA-Class

90.5

4

C-Class

89.5

5

E-Class

88.4

Virtually all ranges showed improved conversion rates, with event the higher volume ranges (C-, E-, and A-Class) achieving percentages in the upper 80s.

Historically, the high performance versions of the prestige brands (BMW M and Mercedes-Benz AMG) were low volume niche vehicles. Limited to a few ranges, they were performance focussed and very expensive – the halo models not just of their ranges but for the brand as a whole. AMG was formed in 1967 as an independent racing engine developer, and they became known for specialising in tuned and modified Mercedes-Benz cars. In 1993 they signed a contract of co-operation with Mercedes-Benz and began developing cars in conjunction with the manufacturer – the first fruit of this venture was the C36 AMG, which featured a 3.6L straight six developing a heady (for the time) 276hp. Other ranges such as the E- and S-Class also gained AMG variants, but volumes were generally very low, as befits such relatively bespoke performance cars. The partnership developed and in 1999 Mercedes-Benz bought 51% of AMG shares, and in 2005 completed the purchase of the company. In the last few years, despite the additional running costs associated with vehicles of this type, demand has actually increased and AMG have expanded their offering to include virtually every Mercedes-Benz range, from A-Class to GLS-Class – no longer just saloons and estates, but roadsters, convertibles, coupes, small hatchbacks and even SUVs. Values for the older cars have also strengthened recently, benefitting from the rise in popularity of sports and performance cars from the 80s and 90s, although such cars need to be in good condition with good provenance.

Turning to the used retail market, it continued to hold up well during September. Glass’s Live Pricing Data, which measures the length of time vehicles remain on the forecourt, reported that the average Days To Sell for the overall market improved by 1.5 days to 41.0 days. Mercedes-Benz also showed an improvement, down 1.8 days to 40.5 days, despite an 11.0% increase in volume. The range that showed the most improvement was the CLC-Class, down 15.1 days to 45.1 days. The A-Class was the range that spent the shortest time on the forecourt at 37.1 days, although the SLK was very close behind with an average stay of 37.2 days. The SL-Class took the longest to move with an average of 50.8 days.

Early reports suggest that October’s used market is following similar trends to September, with good prices and conversion rates being achieved. It will be interesting to see whether the multiple “scrappage” schemes that have been launched in the last few weeks have a positive effect on used demand, especially as this is traditionally the time that the retail market starts to show signs of slowing down.