City diesels weather the storm but 4x4s crash

Used car prices continue to fall. Fears over the economy, added to concern over the government’s road tax plans, are having a knock-on effect on consumer confidence. The situation has seen some 3 year old vehicles drop in value by more than a third over the past 12 months.

Overall prices for 3 year old vehicles are down by nearly a quarter (23.1 per cent) over the past 12 months with petrols the worst affected, with falls, on average, in value of 24.7 per cent. The worst performing sector, not surprisingly, is the petrol 4x4 which has suffered a crash on average of 37.9 per cent. Petrol city cars perform the best with values slipping 14.1 per cent.

Twelve month old vehicles have also seen prices fall year on year, down by 17.7 per cent overall. Petrol MPV's, 4x4's, luxury and executive models are the worst hit, all registering falls in values of over 20 per cent with city diesels the least affected with valuations dipping on average around 8.6 per cent.

It is possible that the government's decision in the Budget to increase vehicle excise duty won't come to fruition, although the credit crunch will certainly continue to have an effect. With buyer confidence at an all time low, the supply and demand chain will continue to be led by practical buying decisions rather than the heart rule head, style and image trends we see when economic conditions are more buoyant.

Despite the difficult market conditions though, many dealers have responded to the challenge and continue to trade successfully. Although the outlook remains troubled, positive shoots of recovery, such as relatively low interest rates, are visible. The demand for low-mileage vehicles, between two and five years old, remains high and though executive and ex-fleet models are proving less buoyant, today’s market should be looked at as part of a normal cycle rather than an apocalypse.