Used car prices reflect economic slow down

Latest figures from leading car auction company, British Car Auctions (BCA), appear to reflect the general slow-down in the UK economy, which has been a feature of a number of other economic barometers released in the last few days.  In BCA’s latest Pulse Report the average used car value remained relatively static in July, with overall volumes, model mix and demand levels similar to those seen in June.

As a result, the average used car value at BCA recorded a modest decrease in July, from £5,802 to £5,784 – a fall of just £18 or a quarter of one percent.   Demand for older, lower value dealer part-exchange cars was largely unchanged in July, but the higher value fleet & lease sector experienced more price pressure.

It is not unusual for some used car market issues to surface in the holiday season and this combined with other economic pressures has resulted in the price slowdown.  It is only recently that the typical seasonal patterns have re-established themselves, following the price falls in 2008 and the sustained price recovery of last year and the early part of 2010. The fall in average price may have been higher were it not for the relatively rich mix of cars for sale at BCA that disguised some of the pressures in the marketplace.

Year on year values were behind for the third month running, by £244 compared to the July 2009 figure of £6,028 – the largest ‘negative’ variance seen this year.  However, values are ahead compared to two years ago – July 2008 saw average values tumble to £4,949 – nearly, but not quite the lowest point they reached.

BCA Communications Director Tony Gannon commented  “Prices have continued to be under some pressure in July, especially in the fleet & lease sector, but sales volumes have held up well in the month, and demand is there for vehicles that are valued in line with their condition and market expectations.  Although we have not experienced seasonal patterns in the market for some time, we are seeing them now and should expect these to continue over the rest of this year.”