Prices on the up but nearly new still good value

Some analysts have stopped wondering why the used car market has spat in the face of recession, and have started to predict when it might end instead! So far this year we have seen massive bargains at the beginning of January, with sales events for once actually offering genuine good deals and once February commenced the trade held its breath and wondered how badly sales would fall off. Except they didn’t they actually grew stronger. The auctions broke records everywhere across the country as dealers rushed to buy more cars to replenish depleted stock levels, and apart from some regional pockets both franchised, supermarket and independents all surged past all expectations.

With March came more predictions of the tap turning off, but if anything demand increased as supply stuttered and prices actually went up meaning the depreciation suffered on a 3 year old car during 2008 had all but completely recovered by the beginning of March. It has even been joked by some trade wags that buyers who purchased a car in late December could probably sell it back to the dealer today for a profit! Now that really would be funny, and the irony is that if dealers had predicted this upturn they needn’t have offered such great deals in the first place and kept hold of margins knowing that stock is becoming almost impossible to locate at anything other than crazy prices.

The latest forecast seems to be that the situation will continue until Easter which will be the first major holiday of the year and buyers are traditionally not out in force at this time, meaning there might just be a balancing of supply and demand. We could see prices start to ease and customers may start to have more choice than they certainly have at present. However with new car sales still some way behind last year’s levels and dealers certainly not entering into any suicidal pre-registration exercises then who knows the situation could last until the Autumn.

All potential buyers should consider that, although prices are rising and they may like to exercise caution and wait until prices fall again before taking the plunge, by buying a late plate used car of almost any make and model they will still be buying a much cheaper car than they did at the same time last year!

Subscribe to Motor Trade Insider by Email


, , , , ,

One Response to Prices on the up but nearly new still good value

  1. Cameron March 30, 2009 at 3:12 pm #

    This is hardly rocket science and any real analyst will tell you that its a standard market behaviour. Because of the lack of consumer confidence and the difficulties in obtaining credit, there was a huge devaluation in used values for most of 2008 which stopped many trade buyers in their tracks as they struggled to sell existing stock. The market slowed down to its slowest pace for many years as markets generally over react – the motor trade is no exception.
    This first part of 2009 we have seen the ‘see saw’ effect caused by an unseasonal lack of stock availabilty and the over devaluation seen through 2008 giving perceived good value for money.
    Prices now won’t neccessarily drop at the rate they did last year, the used car market is historically quite a stable one compared to others and unless there are more shocks to come on the state of the economy (although that may happen!) one would expect that after a while the market to level out and values to continue to edge down as per normal.
    In a nutshell, virtually all cars depriciate-they always have, its just that unpresidented changes in our economy sped up that rate to an artificial high for a considerable period which in turn has led then to sudden inflation of values and the current problem that most dealers are experiencing in sourcing stock.
    What goes up usually comes down but also what goes down can bounce back up.

Powered by WordPress. Designed by WooThemes