.jpg)
Mid year used car Market report June/July 2011’
The Used car Market had remained strong all year, to the point where we were starting to think they must be making up this whole recession because we can’t buy cars. And then around the start of May the market started to behave like we were assured it would, and prices began to drop. For a few weeks sellers held off in the hope that it was a glitch and that prices were about to come back. It was no glitch, it was a market correction and now cars are selling again but at a much reduced price. Whichever Pricing guide you use at the moment prices should be well behind. Even using a combination of price guides, on the average car under £10000 I am currently looking at a minimum of £500 under clean prices across the board. The Obvious cars that are taking a hammering are big engine petrol’s and 4×4’s that have just aged enough to be outside the main dealer fold. As people struggle to lower overheads it has become obvious that the price of fuel is now the price of fuel and it is not temporary.
It is however easy analysis to say that gas guzzlers are being disposed of on mass, there are normal cars that are also taking a beating. Who would have seen new shape Mondeos fall so sharply? They may be a big lump but have sold well new and been reasonably well received and yet semi attractive ones are going through the block under £5000 and all guide books have struggled to monthly adjust to them. Prices in the trade get driven downwards by retail sales and retail sales are slow. Cars are still selling but buyers are in a strong position and are looking only at desirable stock.
So what’s wrong with the stock? Looking at auction catalogues now, there is some exciting stuff available on paper but in the market there are too many similar cars. Ex Lease/Finance cars used to be very desirable and were almost considered blue chip stock in the trade. Now a lot of these cars are coming back through third party and private lease with sketchy maintenance and the condition of these cars is slightly above rental car. There has been a major shift in attitude towards mileage. A strong market had kept high mileage cars afloat, and there has always been a customer who will opt for a 58 plate high miler over a low mileage 07 at the same money. That customer is now gone, and the export market has also responded to EU CO2 tax changes and they are no longer seeking high mileage cheap cars.
Sports cars prices can vary widely and specialist dealers are able to exist in a bubble where they can achieve prices that they set. At auction and in the underwriting business however sports cars are being hit hard and high end luxury sports are only wanted in mint condition with exceptional provenance from proper channels.
It’s not all doom and gloom, good stock is still making good money, an obvious example being Lean cars such as Volkswagen bluemotion diesels and Honda Civic Hybrids. With the amount of ex fleet high mile diesel cars in the market, low mileage diesels are making over book. Well presented showroom quality stock is what buyers are fighting over, at recent attendances of BMW,Volvo and Jaguar Dealer sales we have seen 1 owner 2-3 year old cars with good spec and full manufacturer history making well over predicted money. Salespeople are still selling higher spec cars, and Leather interior and Sat Nav are the two most asked for extras. Other extras such as A/C, or safety features are generally considered standard by the public. Bluetooth/MP3 connectivity is requested by most customers today.
The future is Bleak or bright depending on whether you are buying or selling. We don’t have a crystal ball but we have tracked stock and sales extensively for the period and can see no reason why prices will do anything other than drop for the rest of the year. In the long term we would expect the cost of leasing to increase as used stock coming back to market is falling short of projected residuals.
This is only a market overview to properly represent the used car market we need to examine each brand individually. Join us on Monday when we start at A.
Disclaimer: Our market snapshots are a compilation of the thoughts of several of our contributors. Our data is collated from figures received from auctions we have attended or from sales and purchase figures we have been party to. We occasionally provide example prices as an indicator only. In no way do we claim to be able to give 100% accurate data for the state of the market and our guides should be regarded as a work of informed opinion only.
© 2011, MD. All rights reserved.
