Used Car Prices Stabilize

Friday, 6. November 2009

After a year of successful growth in used car prices we are now starting to see prices level and, in some cases, slightly fall in auction. With fewer new car registrations, a reduction in rental car fleets and cars being scrapped the supply chain of used cars reduced significantly through the year. Businesses started to buy used cars instead of new as well as hold onto their lease cars by extending contracts turning the old supply and demand model on its head and making used cars very expensive. However, extended contracts are starting to come to an end forcing the companies to replace them with new cars. Greater numbers of ex rental cars are returning to the market for re-sale, hence the drop in values. This more stable situation is predicted to remain so for several months now until the usual increase in demand in the springtime. Also, with few good leasing deals available to replace some of the great lease deals that existed 2 and 3 years ago, when current contracts were taken out, many companies will continue to retain lease cars in the hope that we will see a turnaround next year, keeping supply under control. I certainly hope that we see a general reduction in rates as I have a constant backlog of enquiries looking for cars that can’t be found at the rates people and companies are prepared to pay. Green shoots of recovery? Not there in the motor industry yet. By Graham Hill