Then recently we saw used cars performing a little better than might have been expected from the usual patterns. Consequently my thoughts on the year ahead are expressed with some caution because it seems that on a day-to-day basis little can be taken for granted.
Three major factors can have an affect on the British economy in general. Share prices, oil and houses. House prices are still on the up, in some cases at an alarming rate, which can only mean that at some point there will be a slowdown and maybe even a downturn. Oil prices are also likely to spike, depending on what happens in the Middle East and shares are going in all directions – often literally up one day and down the next.
If all these factors go pear-shaped at the same time you can always expect a slowdown in retail demand and an increase in inflation. Holding down inflation remains a major priority for this government but the fact is that further revenues will need to be found from somewhere so that will also impact on consumer spending power and confidence. Given that backdrop, what are we likely to see in the motor industry, going into 2003?
Looking over the next couple of months, based on the feedback I have been receiving recently, is that values in early January will remain fairly level compared to December. Mid-January is the probable time to see any upturn in values, giving an overall book increase in February. Group buyers have been fairly active in buying stock and I see no reason for this to change. Top of their shopping lists are two- to three-year-old cars with sensible mileage and little or no refurbishment requirements.
It makes sense to have three £4000 cars instead of one at £12,000 because the profit on money invested could double.
In the short-term, late-plate cars will also be under pressure. Towards the end of Sept-ember there was a massive uplift in registration figures and those cars are now three months old, and easily found on dealers' forecourts. The focus will therefore be on shifting those registered units over the next couple of months, rather than new, and this is likely to force the manufacturers in turn into chasing new registrations again.
Meanwhile, watch out for new rules governing the sale of used vehicles: from February they can't be taxed without first producing a V5 registration document or V11 renewal notice. This flies in the face of current practice under which cars change hands with the V5 missing or promised to follow.
While dealers are waiting for the DVLA to process new documentations, depreciation might well wipe out any potential profit.