11:21 pm, March 9, 2011
I know I promised not to mention the scrappage scheme again, but I’m a used car dealer of 30 years plus, and if I were to keep all of my promises I’d be doing our reputation a disservice…
Besides which, this month’s column isn’t really about scrappage, but what comes after it. Because for those at the cheaper end of the previously-cherished motor carriage spectrum, like yours truly, the last 12 months have been extremely odd indeed.
Whereas in the pre-scrappage days, folks like me had an almost limitless supply of good, used but not abused 10-year old vehicles to choose from, mostly to sell on at a very modest profit but in a high enough volume to make them more than cost-effective, that rich vein of one-owner low mileage metal has pretty much dried up.
It’s been such an odd year that for the first time in the history of my business, Poo Corner (the bit at the back of my lot where I dump all the PX rubbish and break all the good bits off to sell on eBay) is completely empty. I sold its last incumbent, a faded red and slightly rusty Skoda Favorit, a few days after Christmas for a sum of money that would have offended the bloke I took it in from.
A price that would have offended anyone, in fact, for the value of such a naff and dishevelled looking motor car was dictated by eBay at somewhere in the region of £500. I nearly fell of my swivel chair, having barely allowed three figures for it in the first place.
Looking into Big Mike’s crystal ball, though, I know this situation won’t last. While cheap cars are, by definition, not very cheap at all at the moment, give it four or five months and you won’t be able to move for decent, inexpensive used stock – and here’s why…
With the scrappage scheme itself being consigned to the baler, the major manufacturers are running scared at the moment. And in order to not see their volumes erode too much in the current recession (the politicians tell us it’s over, but anyone who runs their own business knows that, to all intents and purposes, it clearly isn’t) they’re offering huge incentives and subsidies to their main dealers to keep folk walking through the doors.
Almost all of them are coming out of the scrappage scheme and inventing new silly words to call their new schemes. I hate the word ‘scrappage’, by the way. It’s complete made-up twaddle, underlined on my PC by one of those smugger-than-thou red squiggles that tries to make you feel illiterate. You never say to the missus that you’re off to the pub for drinkage, after all.
But I digress. Scrappage is being replaced by ‘Swappage’, ‘Swap ‘n’ Save’, ‘Scrapback’, ‘New-4-Old’ or whatever else they want to bloody well call it. But in effect what’s happening is they’re still promising two grand subsidies on new cars, and the manufacturer is still chipping in the bag of sand it did in the government backed deal. That, in effect, gives the dealer a healthy enough margin to massage his stand-in values.
Most of these schemes support cars between about seven and 10 years old – depends on the manufacturer – and they will work up to a point. After all, these cars are generally younger than the original scrappage scheme allowed, and therefore have more residual value. For now, at least.
What will happen next, though, is that come September when the new reg comes out, dealers’ back yards will fill up with used stock, all of a similar age and value, and these cars will quickly be punted out through auction houses. There’ll be so much choice, and so many of the buggers, that their resale values will take a big whack, and you’ll be able to get some really tidy cars for silly money, especially anything on the pre ‘51’-format numberplate, which instantly look aged on today’s roads.
For guys like me, it’s both a blessing and a curse. A blessing because for the past 10 months or so, I’ve been really short of good, clean stock. A curse because the days when you can stick a 15-year old Skoda on eBay and come out of it with a monkey in your pocket will be well gone. So it’s a good job that Poo Corner, right now, doesn’t have any Eeyores in it.
I could, of course, be wrong. I’ve made mistakes before – my first wife, for example… But for now, if you’re at the ‘distress purchase’ end of the trade, just sit tight, and wait for the rich pickings coming your way from main dealer groups.
