12:48 pm, October 31, 2008
Volatile doesn’t even begin to describe it. What, the Stock Market? No, the used car market. Nobody could ever have predicted how ravaged things have been – it’s akin to a hurricane, leaving destruction in its wake. Only superminis, sensible-engined diesel cars and lower-end mainstream family cars have been left standing.
The rest – the SUV sector, the big-engined people carrier market, as well as anything expensive and luxurious – have all been felled. Even larger-engined Mondeos are being hammered even more so than normal. It’s hell out there.
Will there be any respite? Is the storm over? Will the cars doing well continue to do so? What are the future prospects for that feared 4×4 sector? Where, in short, should dealers be putting their money? All questions we, and you, want answered.
One thing’s for sure, people are certainly wary of making predictions. Things are changing so quickly, the main guides are finding it difficult to keep up.
Volatile sectors can be out of date before the latest guide even hits dealers’ desks. When panic is setting in across the board – witness the ludicrous swings in the FTSE 100, for example – it’s inevitable some may be wary of looking too far into the future.
But it’s essential we do. Livelihoods depend on it. So, we posed one simple question to some of the best industry brains in the business: What do you think will happen to used car prices between now and Christmas? This is what they told us…
Martin Keighley [HPI]
With continued financial uncertainty in most markets, including share prices, banks, housing and the motor industry, used car prices remain unsteady. Vehicles with high CO2 figures will continue to suffer. The price of them, notably 4x4s, is likely to plummet between now and the end of the year. In contrast, we are expecting small cars to hold steady and be in demand.
Also, some high-end, prestige marques are being bought, to export to eastern Europe and Russia. This is likely to help stabilise prices in the short term. But it is likely that prices on the majority of used cars, including all fleet-type cars, will fall at a rate of around four per cent per month.
Richard Crosthwaite [EurotaxGlass’s]
Values will continue to fall, although at a slower rate. Smaller cars may perhaps see the smallest moves and may even stabilise. Big-engined cars are so cheap. It’s hard to see them falling much less. Diesel premiums are probably as high as they will get, and smaller petrol engines may have a brighter future relative to diesel: they are better value and more rare. Luxury saloons, big coupe/roadster sportscars and 4x4s (the worst points in the market for the past few months) look likely to struggle until spring. The older end will come under pressure from late cars. ‘Why have a three-year-old car and only save a few thousand, when you can have nearly new,’ is what the customer is saying.
Sue Robinson [RMIF]
The used car market is in a state of flux, and it is difficult to accurately predict in what direction price trends will go. However, we know many consumers are looking to reduce their motoring costs along with other household commitments, which will stimulate demand for vehicles perceived to have more economic running costs. Consumers are looking for cars with low vehicle excise duty, good fuel economy, and low mileage. First and foremost, they are looking for a bargain. This provides dealers with an opportunity to stimulate business – if their used car portfolio matches consumer requirements.
Darren Kennedy [CAP]
Used car values have been drifting downward since early summer, at a rate of around four per cent per month overall. This is likely to continue. Despite the increasing talk of financial ‘meltdown’ and impending recession in the wider economy, evidence remains that there is ongoing demand for cars at the smaller, more economical end of the market. Inevitably, this means there will be wide variations in price performance – with large, less economical vehicles bearing the brunt of weakening values. There is no reason to expect any significant change in these factors for the remainder of 2008.
John Proctor [SMMT]
Falls in new car registrations are essentially down to a lack of consumer confidence, which will directly impact on the price of used cars. If a person decides to keep their existing car for longer. Then, ultimately, its market value will diminish. This has wide-ranging negative effects. On a fiscal basis, it will become more difficult, and certainly more costly, to trade or sell their current car. This slows down the parc replacement of older vehicles. Unless consumer confidence is restored very soon, prices of used cars will undoubtedly drop further.
Simon Henstock [BCA]
September has brought some relief to the used car market, but the overall picture is far from rosy. Values have strengthened as you might expect following the summer months and professional buyers were certainly more active in September, both in the auction halls and via BCA’s internet-based Live Online service. However, demand is much weaker than we have seen at this point in previous years. This reflects the current broader economic position and there is nothing to suggest there will be any great improvement during 2008.
Alex Wright [Manheim]
The tougher market for wholesale used cars first reported earlier this year, and further undermined by the pre-September seasonal downturn, looks set to continue for some time. However, reassuringly, interest in the lower priced ‘budget’ vehicles at auction remains high, confirming that there continues to be demand in the marketplace if the price is right. Superminis, small and large coupes are up, but average values in the main segments remain under pressure.
