Kirk Fletcher, managing director of Experian’s Automotive division, said: “A slow housing market and the squeeze on spending have left consumer confidence low and this, in turn, hit the used car sector hard last year. The industry recorded the highest drop in sales (down 2.4%) since 2005, when used car sales first started falling.”
Fletcher said the new car market saw a revival in 2007, indicating that there was still a willingness to spend on a new car. However, the new car market is particularly competitive topped with discounts and promotions. Used car dealers are having to work harder to attract customers who are seeing the value of buying a new car over a used one.
Fletcher commented: "The recent media attention on high CO2 emissions and the imminent increases in the costs of running a car mean that it is highly likely consumers will continue to spend cautiously. The feedback from used car dealers is that there will be opportunities to do better, but this will only be achieved if they are more prepared and on the ball."
Despite the overall fall in used car sales, older cars aged between five and seven years old recorded an increase in sales of 3.3%, more than any other age group.
Fletcher added: "The popularity of older cars may be linked to the increasing difficulty consumers are facing when trying to get a bank loan and with older cars costing less, consumers can either pay for them out right or get a smaller loan."
As in previous years, the MPV, SUV and sports segments have continued to increase in sales despite a fall in all other used car segments.
Sales of used MPVs in particular started off strong at the beginning of 2007 (up 11.2%) and, while sales continued to increase, the rate of growth slowed during the following two quarters (5.4% and 3.3%) but rose again towards the end of the year (8.4%) to end the year 6.9% ahead.
Older MPVs (over three years old) saw the biggest growth in sales. The Renault Scenic was the most popular selling used MPV during 2007, with models aged over 10 years old seeing the biggest growth.
Similarly, within the SUV segments, the biggest growth in sales during 2007 was in the older models. The Toyota Rav 4 model was the most popular selling used SUV model during 2007, with those aged between five and six years old seeing the biggest growth, followed closely by those over 10 years old.
Within the sports segment, the Toyota Celica was most popular selling model in the sports segment during 2007 and those aged between six and seven years old saw the biggest growth.
Fletcher said: "Over the last 10 years, the number of models launched in these segments means the market is congested with niche vehicles and, with increased availability, there are inevitably more attractive offers to be had."
Sales of used diesel cars have increased by around 50% in the last five years, while sales of used petrol run cars have continued to fall each year. Experian also identified an increase in the sale of used electric and hybrid vehicles.
Fletcher concluded: "Consumers are more aware of the extra costs of running a car and want more information upfront before making a decision."