Low levels of new car sales mean there are fewer part exchanges for the used market to absorb, says EurotaxGlass’s.
Also, as there are 40 per cent fewer cars younger than 12 months in the system, franchised dealers can concentrate on selling the cheaper cars drawing customers in.
‘During the late spring of 2008, used car demand was starting to decline, and yet new car registrations simultaneously hit a 3-year high, buoyed by sales to fleets who had not yet suffered the ill effects of the downturn,’ said Adrian Rushmore, managing editor at EurotaxGlass’s.
‘This meant the new and used car markets were running at different speeds, with used car demand totally out of step with the growth in supply. As a result, prices fell at a faster rate than at any time in living memory.’
Such a severe mismatch of supply and demand is unlikely to be repeated in 2009, he said.
However, while values are expected to be less unstable in 2009, demand will remain lacklustre for much of the year. ‘Prices for used cars have not yet hit rock bottom and are likely to continue on a downward path for much of 2009,’ Rushmore said.
The average monthly drop in used car values during 2008 – 3.5 per cent – was almost double that recorded during 1992, the low point of the last recession.
An average 3-year-old car today is worth £1,750 less than an identical one of the same age a year ago.