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Oversupply puts used car values under pressure

Used car values are set to tumble for the remainder of the year because of continued oversupply and desirability issues.

Dealers may struggle to sell ex-fleet vehicles with high mileages and low levels of standard equipment as the used market contends with almost one million more three-year-old cars than in 2001.

“The generosity of supply, combined with the seasonal market slow-down from the end of September, means that three to four-year-old prices will probably fall at an accelerated rate until December,” predicts Chris Smith of Glass’s Information Services. “With supplies increasing, anything less than perfect will be under pressure.”

Public perception of the new registration system is having a profound effect on the residual values of 2001 Y-plate vehicles, the last to receive the old-style number plates. “Although many consumers remain unsure of just how the new plate system works, they are clearly able to differentiate it from the previous system and this is influencing perceptions of what constitutes an ‘old’ car,” explains Smith. “There is now a demonstrably higher level of demand for cars with the new style plate.”

Large numbers of Y-plate vehicles being de-fleeted at the end of leasing contracts means that the market is already under pressure, although it may mean that consumers will find a bargain on forecourts as trade auction prices fall. In addition, Smith warns that the 2001 boom in sales of SUVs such as the BMW X5 and Land Rover Freelander will hit these vehicles’ values.

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