Demand for low-running cost cars accelerates

With insurance premiums rising by an average of 30% over a 12 month period and the cost of fuel at a record high, a Glass’s report reveals an “accelerated increase” in consumer demand for cars with lower running costs. The leading vehicle valuations expert studied patterns of trade price movement over several months, through which it found trends signaling an increase in the popularity of cars with smaller power outputs and greater miles to the gallon, particularly in the smaller family segment occupied by the likes of Ford Fiesta and Vauxhall Corsa.

Adrian Rushmore, Managing Editor at Glass’s, said: “The focal point for retail demand is cars that have lower running costs. Whilst the shift in demand has been moving slowly in this direction for some time, it would appear that above inflation increases for fuel and insurance have conspired to accelerate this trend.

“Retail customers shopping for a lower medium-sized car will ask, on the grounds of cost, why it would be necessary to buy anything with a bigger power output than a Focus 1.6 TDCi.”

And this trend is not just affecting the lower end of the market. “Likewise, in the executive sector, a BMW 320d would meet most customers’ requirements”, said Adrian. Larger petrol engined cars were also viewed with increasing disfavour by car dealers particularly if they were visually the same as their smaller engined cousins.

The 4x4 market is reported to be struggling slightly, although with no sign of a collapse. “The best examples were still holding their own”, said Rushmore, “but older, well used, and high mileage cars like Discovery 3, and earlier generation X5, had lost a lot of appeal.”

Dealers are now also selling slightly older vehicles and are buying nearly new cars more selectively “because of a fear that manufacturers may have chosen to add more spice to new car deals during the last 10 days of March.”

“What dealers are ideally looking for in order to satisfy consumer demands are well-presented small and supermini cars that can be purchased for under £3,000”, said Rushmore.

There is slight concern being expressed in the trade about the extended holiday period from Easter to the May Bank Holiday, including the royal wedding. Traders predict a dip in sales and therefore more pressure to lower the prices of used vehicles.