Motor Industry News
The holiday season has hit the used car market hard. Every year we see the usual down turn around this time, however this year it has suffered more than usual. For the last three months we have been reporting much slower than usual sales activity which is showing just how much of an impact the economic climate is having on the used car buyer. It is ironic that whilst in a recession everything essential goes up in price; food, utility bills and, the one that hits the motorist the most, fuel costs. It is the cost of petrol and diesel that has pushed down the values of larger engined 4x4s (with some exceptions), people carriers and saloons. This is a pattern that continues for August.
The only later registered vehicles that are showing any kind of demand are the smaller engine, low co2 output and lower road fund licence models. However these have to be the cleanest low mileage examples to attract any attention at all. Buyers that are in a position to buy are faced with the difficulty of achieving finance approval alongside higher interest charges. There does seem to be a bit of a have/have not scenario arising when it comes to later registered 4x4s. Audi Q5, BMW X3/X5, Porsche Cayenne, Range Rover and Range Rover Sport models all seem to be immune from the current situation, or rather their buyers are.
Many dealer groups are currently not buying any stock at all and are relying purely on part exchange vehicles as their forecourts remain full with plenty of overage stock. The great early start to the year also saw them setting their sales targets at very „optimistic‟ heights but now they are now having to pull these over exuberant figures back to more realistic levels.
The new car market is equally as slow. The long lead times that buyers have grudgingly become accustomed to are slowly decreasing meaning that late low mileage stock is not performing anywhere near as well as we have seen in recent months. Models such as the Audi Q5 which had lead times of six months plus are now available in two to three months. Volkswagen Golfs have also suffered from long delivery dates but are much more readily available now.
One other area of the market that seems to be bucking the trend is the sub £2,000 bracket. There appears to be a shortage of older cars out there with many internet sales sites actually advertising the fact. It seems that in these difficult times people are looking to buy what could be described as a „throw away‟ vehicle! This means buying a car with 12 months MOT and tax with a view to scrapping it if a lot of work is needed when it comes to MOT time.
The older prestige market is the hardest hit sector. As cars have become so much cleaner in the last few years, the now 3 or 4 year old cars such as BMW X5‟s and Audi Q7‟s are not as cost effective to run due to huge road fund license bills and their higher fuel consumption.
Buying trends have certainly changed. People now look at how much a car will cost on a monthly and yearly basis rather than checking performance figures, with Image being a major factor when choosing a car for most buyers. The UK is the most image conscious nation throughout Europe when it comes to the “how good does it look on my drive” competition. However we are now noticing signs that indicate that this could be changing.
Over the past twelve months buyers have changed the questions they ask before taking the plunge into buying a used car. For example “how much will the road tax cost?” rather than “what is the 0 to 60 mph time?”, and “are replacement tyres expensive?” etc. Fuel consumption has always been a big factor when buying but the never ending barrage of new price rises has created a fear of obsolescence for certain vehicles. Buyers who may have opted for a five year old BMW 525d are now forced into making the decision of downsizing, which may not suit their lifestyle, or choosing a non-premium brand.
Five years ago the (previous) government caused great confusion with bungled road fund licence changes which would have seen many vehicles registered after March 2001 plunged into the £400 plus a year bracket. Fortunately they back peddled on this and moved the date to models registered after March 2006. But the confusion lives on, and one thing is for sure, the goal posts will be moved and making the right choice when buying a used car will determine how well you did your homework.
We are now well into the holiday season and although the market is slow it hasn’t stopped completely. Values are a little erratic as the trade are buying either what they want, or what they know they can move on quickly. Anything out of the ordinary will just sell for Ready to Retail money. Used values are fairly steady this month with most values down just 1%.
Transit Connect is still around in numbers with higher spec models being preferred. Citroen Nemo, Fiat Fiorino, and Peugeot Bipper are all down 5% as they start hit the market in numbers. Old model Citroen Berlingo has also fallen back.
Later model Renault Trafic is up 2% as there are some nice ones about in factory colours. It’s the same story for Mercedes Vito Dualiner but care should be taken with Vito Van. If there are too many in one place values will slip.
Landrover Freelander 3 door models are still suffering. Despite small volumes in the market, it is enough to effect trade values which are down significantly this month. Five door models remain strong. Volkswagen’s new Amarok values are buoyant as Volkswagen have sold their initial allocation already.
Big vans are about in volume. Factory coloured Sprinters remain desirable but care should be taken with non-standard colours. Vauxhall Movano older models are down 2.5% this month. Ford Transit is just hanging on value-wise, but any more volume and prices will slide. Volkswagen Crafter values are steady with some high mileage examples achieving good money. „Add Blue‟ model values are now in line with normal engines.
Looking forwards, September should start with a bounce and we feel this will last until the magic word in December.
28th July 2011
VIPDATA is part of CDL Vehicle Information Services Ltd (CDL VIS) the vehicle data arm of CDL Group Holdings Ltd, based in Stockport, Cheshire. www.cdl.co.uk
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