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Retailers take 80% of used sector value

Franchised and used car dealers posted significant growth in sales of older models last year, tightening their stranglehold over the private sector.

The leading position of dealers in the sale of used cars less than two years old, with 91.3% of the market, is confirmed in the Used Car Market report 2000 produced by BCA Europe in association with Sewells International. Dealers also account for nearly 81% of cars between three to five years old – an 11% improvement on 1998 – while their share of the six to eight-year-old sector grew by 4.6% to 63.9% of the market.

Not surprisingly, given their control over younger, higher value cars, dealers also dominate market value, with sales of £22.4bn representing just under 80% of the used sector. They maintained volumes of just under 4m sales in a shrinking marketplace as motorists, concerned by the new car pricing issue, postponed changing their cars.

Dealers now account for 54.8% of all used car transactions, after investing in specialist operations, compared to 41% private-to-private sales.

BCA Europe commissioned consultants BMRB to survey motorists about their attitudes to the car buying process. The results reveal that price remains the overwhelming issue for buying used rather than new. Fifty-four per cent of the 2,500 consumers surveyed said they could not afford to buy new and 30% felt used offered better value for money: 19% cited depreciation of new cars as a factor.

Dealers face pressure from consumers who believe that falling new car prices will force down used values. Some 41% thought used prices would be 'slightly affected', while 32% felt there would be a 'significant' reduction.

Price is also the most important issue when choosing a used car, according to 26% of respondents.

'Knowing the seller' was key for a quarter of motorists, while 'dealer had right car' (18%) and 'specific make or model of car' (16%) were also influential.

In terms of the choice of their last vehicle, 47% cited make/model as the main factor.

Dealers should stock forecourts with low-mileage cars (key to 41% of motorists), younger models (32%), popular body types (26%) – such as hatchbacks, favoured by 48%, saloons (32%) and estates (7%) – and models that attract a low insurance rating (22%).

Specification was ranked lower than safety – 14% compared to 15% – while colour was the main issue for just 9% of motorists.

Consumers buying from dealers were also interested in a warranty (26%), good service – 'friendly and helpful' showroom staff persuaded 20% to buy – and wide choice (18%).

Loyalty to the dealership is important to 16% of drivers who had 'bought from before', while a personal recommendation was a influential factor for 14%.

The report claims local advertisements do generate some business – 9% of motorists questioned were swayed by them. The growing presence of dotcom companies is affecting the market as more consumers gain access to the internet. About one-third of motorists are now online, though this rises considerably among the young, with 68% of drivers between 17-24 on the net.

The percentage of motorists who would use the internet to locate their next vehicle has more than tripled in 12 months, from 18% to 55%, though no mention is made on whether they would buy online.

The findings emphasise the need for dealers to have interactive websites up and running as soon as possible in order to stay ahead of the market and compete with the dotcom operators.

The report adds: “With forecasts on the number of people with access to the worldwide web continuing to grow, the internet is clearly destined to have an increasing influence on the way motorists shop for their cars.”

The UK is still the strongest used car market in Europe, returning 124 sales per 1,000 population, ahead of Netherlands (120), Germany (94) and France (81). It also has the highest parc turn figures, which indicates the marketplace efficiency, posting 35.4% last year, leaving Germany trailing on 27.1% and France on 27%.

Tom Madden, BCA director, consumer affairs, said: “The used car market is a significant factor in the health of the motor industry and that of Great Britain plc.

“The UK car industry continues to grow in stature and importance, thanks to the professional and focused activities of franchised and independent dealers, with the support of manufacturers and professional bodies serving the industry.”

* The Used Car Market Report 2000 costs £99.95 from Shelley Wimbourne at Sewells International (01733 467116).

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