Used car market more stable than new
publication date: Sep 28, 2009
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author/source: Robin Roberts
Demand for used cars in Britain has been remarkably stable compared to the new car market, according to the latest report from Trend Tracker.
The Future of the Used Car Market in Great Britain 2009-2014 says that although the used car market shrank by 5.9pc in the first half of this year, and in fact peaked in 2006, it will still have grown from 6.38 million units in 1999 to an estimated 6.8 million by the end of this year - a growth of 7pc in a decade. At its peak in 2006, the used car market in the UK saw no less than 7.7 million cars change hands.
In contrast, new car sales have been declining since 2003 and experienced a particularly rapid decline in the past 12 months. Trend Tracker estimates that around 1.78 million new cars will be sold in 2009, which is down 31pc from the peak in 2003. As a consequence, the ratio of used to new car sales in the UK has moved from 2.9:1 in 1999 to a forecast 3.8:1 in full-year 2009.
Average used car values have continued to rise for the past several months as stocks reduced. According to some estimates, as many as a quarter of businesses operating fleets have lately been holding on to company cars for an extra year before replacing them. European factories have been cutting the over-production of new cars, removing nearly-new pre-registered stock from the used market.
What good late-plate used stock has been available has been snapped up by franchised dealers, whose falling new car sales brought a dearth of part-exchanges and drove them to frequent the auctions where, until this past year, they had more often been sellers than buyers.
According to Trend Tracker's report, 2009 is expected to see average used car values reach £5,600, 17pc higher than in 1999. With this increase in average selling price, and the increase in used car sales volumes since 1999, the value of the entire used car market has increased from £30.5 billion in 1999 to an estimated £38.1 billion in 2009 - an increase of 25pc.
Despite the growing importance of used cars to British motorists, little change has been seen in the fortunes of used car retailers. The number of small, independent traders has declined, hit by property costs, the declining popularity of dealer finance, and the FSA regulation of finance and insurance sales. Larger used car specialists have been cautious about expanding, with suitable sites and affordable financing both significant constraints.