Used car values will fall by at least 12% between now and Christmas according to EurotaxGlass’s.
The expected fall is put down to the continuing ease on retail demand and second-hand vehicles of most types remaining in plentiful supply. For a three-year old car worth £5,000, this will be almost three times the £225 decline witnessed during the same period last year.
EurotaxGlass’s said dealers have been reporting that retail demand has been lacklustre for much of the summer, with trade prices falling by 5% in July, the highest drop so far this year.
Adrian Rushmore, managing editor at EurotaxGlass’s, said: “Retail demand will remain weak in August, and the widely held view is that the market will remain difficult for the next few months at least.
“We anticipate that trade prices will continue to fall at a greater rate, month on month, between now and the end of the year compared to one year ago. In general this would represent a continuation of a trend that has been apparent during the first seven months of the year.”
Dealer profitability has come under increasing pressure, reports Rushmore: “What has made life difficult for dealers is the rate of price falls from one month to the next.
"Retailers have been responding by adjusting forecourt prices, but maintaining unit sales in line with targets has inevitably come at the cost of much lower margins."
Rushmore says that if the amount of new and used car business continues to fall, so too will the number of part exchanges entering the market. He said: “It may be that these smaller numbers will be better aligned to the lower trade demand, with the consequence that price falls will be less severe. That will only be possible once the current oversupply in the trade is at more manageable levels, but there is no immediate prospect of this happening.”
EurotaxGlass's is advising dealers that prices will step down in an orderly way, avoiding any crash which would "throw the market into turmoil".