F&I Management & Training

Second-hand cars are gaining rather than depreciating in value due to a shortage in supply, an industry-wide research company has found.

CAP Motor Research Ltd, which provides valuation data to the car industry, said the usual 15%-a-year depreciation of used car prices has been reversed.

Companies delaying replacing their fleets and the government scrappage scheme has led to a shortage in supply.

This year the average family car has increased in value by about £600.

Mike Hind from CAP Motor Research Ltd told the BBC: "What usually happens in the second-hand car market is a steady depreciation.

Nearly everything that comes in is being sold at the moment and that is very, very unusual Tim Naylor, British Car Auctions

"But this year we have seen the complete reversal of that, with used-car prices rising on a month-by-month basis by about 3.5% which is translating into really big rises in the values of used cars."

Mr Hind added: "The high values are good news if you want to sell your car but not so great for second hand dealers or anyone trying to pick up a bargain."

Tim Naylor, from British Car Auctions, told the BBC the price rises he has seen in 2009 have been "completely unprecedented".

He said: "Prices have gone up between 25 and 30% depending on the car.

"Nearly everything that comes in is being sold at the moment and that is very, very unusual."

SECOND-HAND CAR PRICE RISES Peugeot 107 Urban 07/07 plate, 20,000 miles: Jan value £4,575 - Sept value £4,850 = +£275 Ford Focus 1.6 Zetec 5dr: 06/06 plate, 30,000 miles: Jan £4,700 - Sept £5,625 = +£925 VW Passat 2.0 SE Tdi 4dr, 06/06 plate, 30,000 miles: Jan £7,550 - Sept £8,850 = +£1,300 Land Rover Discovery 2.7 V6 Tdi SE, 06/06 plate, 30,000 miles: Jan £16,600 - Sept £20,000 = +£3400

Professor David Bailey of Coventry University Business School said he believed the scrappage scheme would be short-lived.

Prof Bailey said: "The way it's going the scrappage scheme will run out of money in October, so we may see a reversal in the new car market."

In April, used-car magazine Parker's reported that for the first time in the UK new cars were cheaper than used ones.

The firm said the anomaly was caused by the dearth in used cars, combined with a recession-led fall in demand for new cars, which has forced carmakers to slash prices.

DATED: 12.09.09

FEED: BBC