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Forecasting the used car market for 2015

The data also shows a significant increase year-on-year  in the volume of product on sale in the retail market. A 15.62% increase qualifies the fact that there is more choice for the retail buyer. This increase has also brought an improvement in product choice for both trade and retail buyers as leasing and contract hire companies start to defleet more “user chooser” product rather than just the plethora of bland “business” models that have been so prevalent in recent years.

 

Volumes will put pressure on used car values

While this scenario is good news overall, there is a negative side to this activity and that comes in the form of pressure on used values across all age ranges. With choice and volume, the balance of power has shifted from vendors to buyers and the last quarter of 2014 saw downward value movements of about 3% a month in Glass’s data, which is more in line with the balanced pre-recession markets of 2007 and 2008.

Overall, 2015 will be an interesting and generally positive year for both new and used car sales, with both sectors remaining positive until the third quarter. By then, the general election will have happened and the new government will have returned from summer recess and be preparing to implement its new policies and austerity measures. In addition, we are likely to see the beginning of the highly publicised increases in interest rates that are unlikely to be “permitted” before the election.

Therefore, from this point there are two paths ahead, with the new car market being the jewel in the crown. Here we see the new car market set for continued growth and prosperity, even if forced by the manufacturers, and a further increase in registration volume of about 5.6% by the end of 2015.

However, the used car market will see a significant increase in ex-contract hire and leasing volume from this point, along with greater numbers of early-term PCP product and this will put some further negative pressure on values while also giving the retail buyer more choice. Choice is fine, but combine this with some perhaps less than encouraging financial circumstances and the used car market may falter.

Inevitably, there will be a solution should this happen, probably in the form of innovative used car finance packaging. There are many variations that can be created around low deposit, low rate, extended periods and larger balloons.



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