Lease Rates That Are Competitive

Friday, 6. March 2009

More and more people that either bought or leased cars over the last two years are either holding onto their cars or extending their leases. Leasing companies have been encouraging extensions putting back the need to sell the end of lease car till as late as possible in the belief that used car prices will recover. But as I reported recently this drop in demand for new cars hasn’t led to a mass of unsold cars finding their way into the market at knock down prices because the manufacturers simply dropped production to reduce stocking levels then proceeded to introduce price increases. So whilst we effectively have a few stock clearing sales going on there are much fewer ‘bargains’ about than there were a year ago. This lack of new car sales has had an interesting effect. With fewer new cars being sold more people have been looking to bag a used car bargain so suddenly there has been an increase in demand for used cars. The dealers haven’t been taking in anywhere near as many part exchanges so they have had to go to auction for their stock which has caused auction houses to break all sorts of records in January this year. British Car Auctions saw record volumes and record conversion rates (numbers of cars sold). BCA saw more cars and vans sold in January than in any previous January. The group average conversion rate was 92%, the highest recorded since 1946 when the company started. Average prices rose for the 3^rd month running and average prices rose by £300 in January compared to December. The prices achieved against trade value were the highest for more than a year and more than a point ahead of January 2008. Manheim, the other major auction house, has also reported similar trends so for those hanging on to bag a bigger used car bargain may be in for a bit of a shock, you may have missed the boat on the used car front as well! However, this can only be good news for those that lease as the strengthening of the resale values should have a positive effect on lease rates. By Graham Hill