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Used car market analysis

One of the key issues in the current used car market is the fall-out from the good times of last year and into this year.

When dealers were paying top money for cars which they desperately needed just to have something to stock, a lot of vehicles were caught high and dry on the forecourt when the market turned. Now many of those cars are over-age and worth significantly less now than when they were initially acquired.

This is adding to the re-emergence of oversupply as they attempt to trade out of them. And despite the lessons of the last two years, which showed beyond doubt that late plate supply is perhaps the most important factor in the stability of market values, significant numbers are again appearing.
Research is bringing to light many examples of this. For example, one manufacturer turned out to have more than twice as many cars as were listed in the itinerary. They were mainly on 59 plates, but there were 10 plates too. This can only lead to further downward pressure on values.

One frustration is the nervousness that mounts toward the end of the month, when the anticipation of the next guide movement sparks caution. More than one disposer has reported that they are able to do fairly brisk business in the first fortnight of each month, but then struggle to gain interest unless cars are sufficiently cheap to remain good value even after another downward revision.

The van market is similarly difficult. Although there is still a market for exceptional vehicles, one area which is proving extremely problematic is three to four-year-old vans with 70,000 or more miles. Because there is plenty of stock around, these vehicles will often fail to attract a single bid.

Despite the undoubted pain caused by larger than seasonal price falls in the current downturn, it is worth remembering that there is still a retail market for used cars. There are also those that say the harder the times, the better it is for the used car market. Consumers may well opt for slightly older cars and that will prove challenging for franchise dealers. But recent times have shown that when new car registrations are reduced it creates a far stronger used car market.

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