Used car market recovery

Time 9:40 pm, November 14, 2008

used car market recovery imageUSED car experts HPI report signs of recovery in the used car market.

Depreciation rates of 12 month old city cars, for example, has been slowing for some months now. Supermini and small car depreciation has levelled out.

What’s more, three year old city car and supermini depreciation is steadying, which HPI says is even more evidence that confidence is returning.

Alas, the overall picture is not as positive. The year on year decline for 12 month old cars in October increase from 20 per cent to 24 per cent.

It’s even worse for three year old cars. They’ve plunged to 28.1 per cent. It gets worse still. Limit your view to petrol cars, and the fall is 30 per cent.

It continues. Three year old petrol MPVs and 4x4s are worth two thirds of what they were this time last year. For a 4×4, that’s a fall of just under 40 per cent.

If that’s not bad enough, there’s something else worrying HPI’s Martin Keighley – a shortage of wholesale used stock.

This is because of a multitude of reasons. Fleets are extending contracts. Many fleet cars are being marketed for secondary leases – especially large 4x4s. Dealers’ retail business is just not sufficient to generate part-exchange models.

Dealers are also holding onto older models as retail stock, rather than wholesaling them.

‘The new market could be the key to recovery or failure,’ said Keighley. ‘Manufacturers continue to tell us that new prices have to keep rising, due to increased costs, but this logic flies in the face of a true market where house, used vehicles and even oil prices are falling.

‘Reliance on web-based car sales sites for ballpark valuations is therefore extremely misleading. There is no substitute for experience and independent market research.’

The outlook? You don’t need too many guesses. ‘We can expect further falls for December.’

Upturn around the corner?

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