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Used cars shine amid 'rip off Britain' new car pricing gloom

Nobody should be surprised that the year began as strongly as it did - all the signs were there beforehand.

Nor has the upturn been entirely trade-led, as some had feared. Re-stocking was always going to improve matters for a time but had there been no retail interest everyone would have been in big trouble.

A particular area of strength are T and V plate cars, which seem to have seen some of the biggest upward movements in price. One of the most widely touted reasons for this is the continuing struggle on new car sales.

A salesman confronted by a dithering new car customer is typically switch-selling them into T and V plate cars which, due to the market pressures of last year, have incredible retail price appeal.

But they aren't all selling especially cheaply now. I have spoken to several executive marque sales managers who are dealing customers into V plates for close to new car money - and in some cases for more than they were originally intending to spend on a new car.

There is some good news here for the used car retailer as there is a growing feeling from consumers that they're not being 'legged up' on used prices. They have been bombarded with propaganda about 'rip off' new car prices and are now seeing used cars as an excellent value for money proposition.

There is evidence for this at auction too, where on a number of occasions cars have been making close to new money.

An excellent example was a recent BMW Finance sale where 99T 3 Series models were achieving more than 90% of list price. Bear in mind that these are trade figures and when the margin has been built in these cars will be retailing at close to list money.

Although this example is exceptional, it is reflecting an emerging pattern for many other cars. Of course the question, as always, is how long this can continue. During the early part of February the majority of dealers were still going strong on used cars. But there is some anticipation that values will soften towards the end of the month and into March.

This forecast is partially prompted by general caution - the view that things just can't continue on such a roll - and some evidence of a slight retail slowdown. And, of course, the arrival of another plate is likely to introduce an element of instability.

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