Reports from both the
Vehicle Remarketing Association (VRA) and CAP suggest that used car prices remain
steady, with values falling only slightly, except for 4x4s which
are enjoying a seasonal boost.
The CAP Used Car Price Index reports that the
paucity of overall stock has kept prices more level from September
to November than the previous three months, while the VRA reports
an increase in used vehicles available across October and November.
It also predicts a marginal fall in values toward the end of the
year.
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Of all used cars, only the 4×4 segment saw an
increase in value – by 3.2% from September to November compared to
the previous three months, according to CAP. The VRA attributes the
bucked trend to the popularity of the 4x4s in winter. Both reports
acknowledged the steepest drop in prices was seen in the
convertible segment, where vehicles dropped an average of 9.6% in
value.
Despite the popularity of 4x4s, tax and fuel
efficiency continue to be deciding factors for those purchasing
used cars. CAP sites the value of superminis falling less than
most, by only 1.9%, while the VRA notes that prices of sports cars
and large-engine executive vehicles experienced above-average
depreciation over the period, both by 4.2% according to CAP’s
figures.
Large family cars, in good supply and quicker
to depreciate in the used market since 2008, are no longer losing
their value as sharply, according to CAP, falling just 2.3% over
the period.
CAP also notes that since the recession,
consumer nervousness has kept used vehicle values steady. As a
result depreciation – the biggest cost to car owners, in excess of
insurance or fuel consumption – has slowed.
Meanwhile, although dealerships are turning
more to used cars to generate profit, that same nervousness on the
forecourt – not to mention aggressive finance offers imposed on new
cars – is leading dealers to prioritise a quick turnaround of
vehicles with least work needed or lowest mileage, according to VRA
members surveyed.
Though market timidity may not be going away,
VRA members expect dealers to increase used stock and marketing
from January onward. With around 400,000 less new vehicles bought
every year since 2008 the reduced supply of vehicles under four
years old is expected to continue.
richardbrown@vrlfinancialnews.com
