Thursday, December 18, 2008
Wanted: Quality used cars
Buyers hunt out no frills used cars at the right price
As the UK gets to grips with a collapsing new car market, HPI, the vehicle history check experts, reports that the looming recession is affecting the way consumers think about used cars. More and more car buyers are prepared to forego the latest gadgets in favour of bagging a bargain. So although the current market looks gloomy, the latest HPI Used Car Valuations Index suggests smart buyers are shopping around for no frills used cars at the right price.
Martin Keighley, HPI's Used Car Valuations expert says now is the time to buy for consumers looking to downsize: "With new cars out of reach, we are seeing more buyers looking for top quality used cars. And many families that have in the past run two or more cars have and are continuing to cut back. The changes are often from a 4 door saloon or 5 door hatch and a sports or coupe as the second car, to one vehicle that will cover the practical needs of a family.
"However, there is a scarcity of quality used vehicles around. Reliance on credit has created a use and throwaway society, meaning used cars, when they come to the market, are often in poor condition. The knock on effect has been a shortage of cheaper, older and clean cars. The problem will get much worse, especially as 4x4 and larger vehicles are slipping to values where they are practically un-saleable. Because of this, many owners will simply run them into the ground.
"What we are seeing is that models that have been undesirable in the past, such as medium sized Estates with values the same or less than their hatchback counterparts, are now finding buyers looking for practical alternatives. For example, the Ford Focus and Vauxhall Astra estates cost the same to run but are much more practical, and as such we expect values to stabilize on these. Furthermore, it's just possible clean four, five and six year old models may soon start to hold their value and even increase as this pressure is brought to bear."
Overall, used car prices continue to slip with year on year valuations 24.6% lower in November than the same time last year for all 12 month old cars. The decline is even more pronounced with three year old models now worth a staggering 29.1% less than in 2007. Both fuel types have fallen over 23% year-on-year in the case of 12 month cars, with 36 month old diesels outshining 36 month old petrols slightly with a fall of 27.2% compared to 30.5%.
Comparing figures month-on-month, November's decline against October is a further 5.1% and 5.4% for 12 and 36 month old cars respectively, offering no let up for the beleaguered industry.
Concludes Keighley: "A shortage of used quality stock means that demand is currently outstripping supply. This is mainly due to owners either hanging onto their car until the economy becomes more stable, or they are selling on privately to someone they know or through the classifieds, bypassing dealers altogether."
DATED: 18.12.08
FEED: AW
