Used car demand up

With the scrappage scheme in its final month, consumer demand for £4-6,000 second-hand models is expected to surge as new cars become less value for money, says e-retailer Carsite.co.uk.

Reflecting the increased demand for quality second hand cars, trade values for popular models in the £4-6,000 price bracket have increased by almost £200 on certain models between February and March.  From February to March the value of a 2007 Vauxhall Corsa increased by £180, a 2007 Kia Picanto rose by £130 and a 2007 Hyundai Getz appreciated £100.

The significant discount off a new car, coupled with the rising values of used cars in 2009, meant that during the scrappage scheme buyers comparing basic spec second-hand models against their new counterparts often found it financially more attractive to ‘buy new.’

Pint-sized budget models such as the Kia Picanto and Hyundai i10 proved especially popular, with entry-level examples available from around £5,000 after the scrappage discount.

Following the removal of scrappage allowances, the cheapest price of a new car is about to be almost £6,500. As a result, Carsite expects a sudden increase in demand for better equipped and better value second-hand models, particularly those in the £4-6,000 bracket.

Alistair Jeff, Sales Director at Carsite.co.uk, commented; ‘The scrappage scheme may be in the final stages but its effects will be long lasting. The market is still healthy with buyers but many are working with restricted finances. Cost-conscious consumers looking to invest in a quality vehicle within budget will find buying used a more accessible route. Demand for these value vehicles will increase but supply is still restricted and so prices in the sector will rise. We’re looking at a new era for the second-hand market.’

Despite the generous scrappage allowance, buying ‘new’ didn’t always enable big savings. A recent investigation by What Car? magazine revealed new car prices rose by an average of 9% in the past 12 months, with discounts offered on new models shrinking by 13% over the same period. On some models, such as Ford Fiesta variants, the price rises were greater than the £2000 discount offered through the scheme.