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Dealer grip on used sector tightens up

Car dealers are tightening their grip on the used sector, accounting for 56.6 per cent of all transactions last year, but 81.6 per cent of the market value.

The 2002 Used Car Market report from BCA Europe reveals that 6.4m used cars were sold in the UK last year, worth £25.4bn. This is down 419,000 on 2000 due to fewer private-to-private sales and a drop in the nine years-plus sector. The strength of the new car market affected sales in the sub two-year-old category, which dropped to 937,000 units - 14.7 per cent of the sector. Any fall will affect dealers' profits as they dominate this part of the market, retailing 92.1 per cent of used cars under two years old.

Dealers also account for 79.6 per cent of cars aged between three and five years old, up 4.4 per cent on last year. But this sector has also fallen, by 118,000 units to 1.66m, which is 26 per cent of the market.

With cars in the six to eight-year-old sector rising by 57,000 units to 1.35m it underlines the need for dealers to have a range of car types and ages available to accommodate market fluctuations. However, they need to be wary when pricing stock, particularly part-exchanges, as average values of six to eight-year-old vehicles dropped £579 to £3750. Average prices in the zero to two-year-old sector rose £187 to £9597, and by £199 to £6610 for cars aged three to five.

The decrease in used car transactions could stabilise over the next few years as fewer buyers are likely to defect to the new market next time they buy, despite the lower prices. Nearly half of the 3000 people surveyed in the BCA report agree that new car prices are falling, but only 23 per cent say they will consider buying new next time - a drop of nine per cent on last year.

Price remains the major issue, with 50 per cent unable to afford new and 32 per cent citing that used cars are better value for money.

n For further information or to order the BCA Used Car Market report 2002, priced £99.95, call Sewells Information & Research on 01733 468254.

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