Thursday, August 21, 2008
Used car prices in downward spiral
Analyst predicts slump ahead of plate-change
Used car residual values look set to weaken further as dealers move to cut down on stock ahead of the September plate-change.
According to Michael Vassallo, an analyst form stockbroker Brewin Dolphin, the used car sector downturn is one of the most “significant market adjustments for years” and has “yet to run its course”.
Vassallo said used values dropped 5 per cent in June compared to May – exceeding a norm of 3 per cent.
He said this represented the steepest fall in the value of three-year-old cars for more than five years.
Prices of executive and 4x4 models plummeted 8 per cent in June – emphasising the waning consumer demand for higher fuel consumption cars.
Used values are historically weakest in the second quarter but Vassallo warned that BCA data suggested the market was unlikely to recover in Q3 this year.
“Unit sales have been largely maintained at levels not too far short of forecasts but this has come at the cost of much lower margins,” he said.
“However, lower margins are seen as a necessary evil to clear ageing stock.”
DATED: 21.08.08
FEED: MT
Used car residual values look set to weaken further as dealers move to cut down on stock ahead of the September plate-change.
According to Michael Vassallo, an analyst form stockbroker Brewin Dolphin, the used car sector downturn is one of the most “significant market adjustments for years” and has “yet to run its course”.
Vassallo said used values dropped 5 per cent in June compared to May – exceeding a norm of 3 per cent.
He said this represented the steepest fall in the value of three-year-old cars for more than five years.
Prices of executive and 4x4 models plummeted 8 per cent in June – emphasising the waning consumer demand for higher fuel consumption cars.
Used values are historically weakest in the second quarter but Vassallo warned that BCA data suggested the market was unlikely to recover in Q3 this year.
“Unit sales have been largely maintained at levels not too far short of forecasts but this has come at the cost of much lower margins,” he said.
“However, lower margins are seen as a necessary evil to clear ageing stock.”
DATED: 21.08.08
FEED: MT
