Used Car Auction Drops Not Good For Leasing

Thursday, 3. June 2010

Just as we were hoping to see more lease deals come through and rates start to drop CAP, the used car valuation company, has announced a weakening of the used car market and prices through auction starting to fall slightly. Mike Hind of CAP said that he wasn’t too concerned as ‘This is not the same dynamic as the panic of 2008.’ Although he went on to point out that the market is at its weakest for 12 months with no sign of general strengthening in the short term. According to auction houses Manheim and British Car Auctions, prices have dropped by an average of 2.3 – 2.5% during April. Now one of the interesting things about this situation is that ex lease cars are not in particularly good condition when being sold in auction which suggests that the incredible amounts that the leasing companies are charging to re-furbish cars is not actually being spent on the cars but finding its way into the pocket of the funder. There doesn’t appear to be much that we can do about this other than write letters of complaint but the bottom line is that this suggests that lease rates are not going to improve much over the next few months so as always if you see a bargain, don’t dilly dally, snap it up or you’ll regret it. By Graham Hill