Looking for a car around the £5,000 mark? Then join the queue

For the last few weeks buyers have been queuing up to purchase sub £5k small to medium sized cars which are seen as a lower risk from the ravages of depreciation and are usually cheaper to insure, tax and maintain.
Although the trend towards downsizing would normally mean customers opting for this segment of the market in a recession, this has bought private and retail buyers alike out to either trade out of more risky expensive models or in the face of worries about jobs and financial security to rid them of the burden of a monthly payment.

The downside is that with more people opting for this price bracket the demand will start to outweigh the supply, which is why auctions have been packed with buyers and many dealer groups and other large auction vendors have been reporting market contradictions with large profits on their auction trade-ins. Indeed some dealers are saying that their auction sales are one of the few avenues to make a profit in these demanding times. As we have often reported, however because of the apparent fear of large expensive 4wd cars some dealers are indicating record sales as consumers who don’t have a trade in look to take advantage of some amazing deals on this kind of product.

The interest rate cut should have a great effect on the ability to sell more cars as money in theory should be easier and cheaper to borrow but as we’ve seen finance decline rates are actually increasing and the banks are reluctant to fund some major dealer groups stock, meaning they have no way of retailing their way out of the problems they are facing thus leading to cuts and job losses.

The banks have a lot to answer for and the governments much talked about claim to ensure they start lending again and stimulate the overall market seems to falling on deaf ears!

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7 Responses to Looking for a car around the £5,000 mark? Then join the queue

  1. mARK rOBBINS December 12, 2008 at 10:17 am #

    Really? what part of the country are they queuing up in to spend their Five Grand,? because its definitely not in the south east ! only yesterday I spoke with the Auction Manager of a well known group who said it was the “worst month he had known” adding, “I don’t know when its going to end either”

    All of the dealers (and I do mean all) that I have spoken with have said its frightening right now, with many (including myself) not yet turned a wheel this month and all of us with a huge choice of sub five grand cars, maybe it is regional, but down here in Essex typically “Mondeo Man” territory, even on forty and fifty car stocking sites its as bad as we’ve ever known it. Queuing up? show me One customer right now and i would be a happy man !

  2. Brendan Myers December 12, 2008 at 11:57 am #

    The up and down story of regional differences is, in my opinion easily explainable because of the economic downturn, people automatically trade-down or keep their cars as a first thought, then people who were going to spend say £10k will naturally think about taking a safer option by spending under £5k. The big question then is that because there are loads of cars around in that bracket people will then have choice so although lots of smaller dealers or traders who retail a few out of the paper are really struggling at the auctions, I visit Meashsham, Paddock Wood sometimes Blackbushe and I often come away empty handed as the prices are more like retail and private people are often on the same cars that I want – specifically small stuff good insurance etc, So I think that maybe it’s become what sort of under £5k cars are now selling, but even this changes by the week! Think I’ll go back to window cleaning in the new year!

  3. Dino December 12, 2008 at 1:08 pm #

    IMO it’s too many dealers selling too many cars chasing too few customers…oh and maybe they are priced too high! Perhaps these dealers who say no one is buying need to look again at the price they are selling at? Dino

  4. mARK rOBBINS December 13, 2008 at 12:03 pm #

    Hey Dino, even when they are priced at cost with no profit, (Yes, we are selling cars with “No profit” believe it or not ) the customer still wants more money off! and a full warranty, and a years MOT, and mats etc etc………its a case of the grass is greener syndrome, “we can find this cheaper elsewhere” when in reality thats not always the case.

  5. Dino December 15, 2008 at 2:03 pm #

    Maybe dealers need to get real. The cars are not worth what you paid for them anymore so instead of selling at “no profit” maybe they need to be soldl at loss! just my opinion. Dino

  6. Mark Robbins December 16, 2008 at 12:01 am #

    Yeah, great business idea, lets all sell at a loss! that way the whole retail market will just collapse, one other thing, if Motor Dealers cars are not worth anything what about Joe Public’s car, even more worthless?

  7. Dino December 16, 2008 at 11:31 am #

    But the longer you hold on to them the less they are worth. just saying in my opinion maybe have to cut the losses? Dino

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