Sales slide started last year, says report

publication date: Sep 4, 2008

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author/source: Robin Roberts

The origins of the downturn in the used car market can be seen in a new report by British Car Auctions. 

The BCA Used Car Market Report, now in its 18th year shows that used car volumes and values fell last year when the uncertain economy and rising household bills were only beginning to affect consumer confidence.

Annual used car volumes fell by 384,000 units to 7.1 million in 2007.  Despite this, UK motorists spent £33.3 Billion on used cars last year, down by £0.6 billion on 2006 but still the second highest figure ever recorded.

Further proof that car sales are cooling is provided by the parc turn figure, the indicator which shows annual new and used car volumes as a percentage of the UK car parc.  This measures the churn in the marketplace and is a useful way of measuring car sales trends. 

With weaker sales of 9.4 million new and used cars, versus a growing car parc of 30.2 million, the overall UK car ‘parc turn’ fell 1% to 31.5% last year.

The report, written by Prof Peter N C Cooke and published by the Buckingham University Centre for Automotive Management, paints a picture of a used car industry that is experiencing significant pressures from a number of sources.  Even so, volumes and values remained among the highest recorded in the 18 years of the Report.

BCA Communications Director Tony Gannon said, “The current trading performance on used vehicles should be seen in this broader context of a used car market that can fluctuate but has an underlying strength. 

“While our latest report highlights the origins of the current downturn, it also shows how the market has bounced back from similar economic pressures in previous years.  There is a deep-seated resilience in the used car market even when times are hard.”

The UK’s used car market had mixed fortunes in 2007.  Overall values held firm, as higher sales values offset the drop in used car volumes.

Weaker sales in the 0-2 year and 3-5 year age groups saw used car volumes fall 5.2% to 7.059 million units in 2007.  Both dealers and private-to-private used car sales fell last year, the former down by 2.7% and 108,000 units to 3.97 million, and the latter down by 6.1% (176,000 units) at 2.71 million.

Perhaps unsurprisingly given their strong performance in recent years, franchised and independent used car dealers outperformed the market in 2007, their used car volumes falling by 2.7% compared to an overall used car market fall of 5.2%.  Dealers sold 3.97 million units in 2007, giving them a record market share of 56.3%.

Dealers also continued to dominate used car sales in terms of value, as their share
rose to its highest point for six years – up 1.5 points to 77% in 2007, equivalent to £25.7 billion.

The average sales price of a used car from a franchised or non-franchised dealer was £6,464 in 2007, a rise of £198 compared to the previous year.  The average value of a private-to-private sale also rose last year, by £111 to £2,179.