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Confidence returns as May sales improve

Dealers' confidence is beginning to bounce back after used car sales improved in May.

Cap Used Car Confidence Index showed that overall confidence had risen 22 points to 32, though dealers in the North of England were still struggling to attract customers. Sales nationally rose by 5.3% year-on-year, underpinned by dealers in the Anglia region who enjoyed a near-37% increase on May 1999.

Scottish used car buyers returned to the market enabling dealers to turn a 9.7% year-on-year shortfall in April into a 14.3% increase in May.

Cap advises dealers who continue to struggle to begin exploiting personal contract plans. It believes PCPs will negate customer apprehension over future price reductions by protecting residual values.

Mark Norman, Cap Black Book editor, said: “At the root of the lack of confidence seems to be a fear that, however cheap the car seems today, it will inevitably be cheaper tomorrow and that means taking a big hit on depreciation. “By using the PCP, the issue of future used car price movements is conveniently sidestepped – a move which wipes out one of the biggest objections the customer might have to committing.”

He added: “Not only that, but deposits can be flexible, which can only help to smooth the immediate decision-making process.”

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