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Used sales will be affected for years, dealers told
publication date: Mar 2, 2010
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author/source: Robin Roberts
The protracted downturn in new-car sales over
recent years will have a significant effect on the used market in 2010
and beyond, warns Glass’s Guide.
The main cause for concern among dealers will be a major reduction in the supply of one- and two-year-old used cars.
“It
was a situation that was prevalent following the recession of the early
1990s and it will be repeated over the next few years,” comments Adrian
Rushmore, Managing Editor of the Guide. “When new car sales remain
depressed for a succession of years the issue becomes more acute,
because future used car supply reduces still further.”
Dealers will
certainly experience more difficulty in sourcing one- and two-year-old
cars this year compared to last, as a result of the marked fall in
registrations in 2009 and 2008. “The saving grace for dealers is that
the supply of three- to five-year-old cars will be fairly constant this
year, thanks to new sales of 2.4m in 2007, 2.3m in 2006, and 2.4m in
2005.” adds Rushmore.
Used cars up to five years old are the
lifeblood of the dealer trade. Dealers currently account for around 87
per cent of sales of up-to-two-year-old cars, and 77 per cent of three-
to five-year-old cars.
Rushmore believes the current Scrappage
Scheme could compound the stock shortage problem still further. “Around
300,000 new car sales in 2009 came through Scrappage, but we anticipate
that many of those that have traded in a 10-year-old car are not likely
to follow the typical three- to four-year replacement cycle. That means
the availability of part-exchanged cars from 2012 will reduce still
further.”
Rushmore concludes: “The recovery in new sales is widely
predicted to be slow, with forecasters predicting that the market will
only edge back to two million units by 2012. A constrained new market
in the medium term will continue to keep future used-car supply in
check, to the benefit and slight improvement of long-term residual
values.” | | |
Detailed analysis of the post-scrappage car market will
be included in Glass’s forthcoming report entitled ‘Surviving The Slump
– the UK car market in 2010 and beyond’.
To be published in April, the
report will analyse the prospects for the automotive industry in the
medium and long term, providing unique, comprehensive insight into the
key factors affecting business prospects for dealers, manufacturers and
fleets.
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