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Study shows fall in used car retail prices

Recent research from Auto Trader highlights that the average price of used cars actually fell 1.5% in 2011, compared with 2010.

The inflation-beating decline could've been greater were it not for strengthening prices in the final two months of the year, its findings reveal.

The average used car price in 2011 was £9,018, compared with £9,155 in 2010.

However, the Auto Trader Price Index also highlights that the picture is not a uniform one across all regions and age ranges and that there are quite distinct market dynamics at play.

A reduction in the volume of 0-3 year old vehicles available for sale, led to an increase in prices of over 6% for this age bracket.

This contrasted with a 6% fall in the prices for cars aged over 10 years old.

And while trade prices continue to strengthen it suggests motor retailers will face pressure on their used car margins.

Tim Peake, strategy director at Auto Trader, said the picture for 2012 is one of a challenging market.

"Concerns over rising unemployment and pressure on household incomes are likely to be the principle factors pinning back new and used car sales. Furthermore the continuing shortage of good quality stock coming to the market will lead to higher trade prices.

"Those dealers who will therefore succeed, will focus on ‘retail minus’ strategies and not ‘trade plus’ pricing."

Peake said the winners will be those who seek to trade their way out of the current climate, being smart about buying appropriate stock, focussing heavily on stock turn and embracing the online opportunities to position themselves as internet car retailers.

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