Used price gloom

Time 7:21 am, August 7, 2008

36905maz.jpgUSED car values are going to fall by 12 per cent between now and Christmas – at least.

EurotaxGlass’s says that retail demand is continuing to ease back, which will make cars lose three times as much as the same period last year.

Prices fell by five per cent in June alone, another example of the lacklusture demand that’s been evident all summer.

‘Retail demand will remain weak in August, and the widely held view is that the market will remain difficult for the next few months at least,’ said Adrian Rushmore, managing editor at EurotaxGlass’s.

This has, alas, an inevitable hit: profitability.

‘What has made life difficult for dealers is the rate of price falls from one month to the next’ said Rushmore. ‘Retailers have been responding by adjusting forecourt prices, but maintaining unit sales in line with targets has inevitably come at the cost of much lower margins.’

But there may be a chink of light. ‘If the amount of new and used car business continues to ease back, so too will the number of part-exchanges entering the market. It may be that these smaller numbers will be better aligned to the lower trade demand, with the consequence that price falls will be less severe.

It won’t happen overnight, though. ‘That will only be possible once the current oversupply in the trade is at more manageable levels, but there is no immediate prospect of this happening.’

‘We believe that the current price correction has still to run its course with no immediate end in sight. If there is any consolation for dealers, it would be that prices will step down in an orderly way, thereby avoiding any crash which would throw the market into turmoil.’

How has the slowdown affected you? Are conditions out there better than EurotaxGlass’s say – or much, much worse? Do please drop us a quick e-mail to let us know.

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