Faltering demand creates buyers’ market for used cars

The used car market has experienced a marked downturn in activity over recent weeks, with the usual seasonal weakening in trade demand and prices coming more suddenly and more sharply than many dealers had anticipated. “Following an encouraging summer for used car prices, October’s sudden slowdown has quickly transformed this into a buyers’ market,” comments Adrian Rushmore, Managing Editor at EurotaxGlass’s.

“Whilst in reality the decline is probably no worse than in previous years, many vehicle retailers appear to be surprised and disappointed by its speed and magnitude,” he adds.

A number of factors are being blamed. In September there was a frenzy of new car registrations as dealers clamoured to hit their manufacturer-imposed sales targets. “New car deals have been irresistibly attractive, and September marked as big a ‘giveaway’ as we can remember,” explains Rushmore. Enticing deals on new cars inevitably affect the saleability and, therefore, prices of equivalent nearly-new models.

This situation has been made worse by the influx of cars that are being pre-registered by dealers as ‘demonstrators’ before being moved to the used car forecourt within a matter of months. “It is concerning to see ’57-plated cars on sale in appreciable numbers, many being offered outside the franchised networks,” says Rushmore.

Furthermore, with dealers preoccupied with finding buyers for their nearly-new vehicles, auction attendances and prices have suffered. “Franchised dealers have their hands full reducing their stock inventories of nearly-new cars, requiring some high-profile retail promotions. This means that during this period, many dealers are unlikely to be active buyers of cars in the trade.”

However, it is not just the values of nearly-new cars that are suffering. The market has also had to absorb significant numbers of cars registered by fleet and contract hire companies following the introduction of the ’54-plate in September 2004.

“The ready availability of stock at most ages will continue to affect values until at least mid-November,” suggests Rushmore.