Used up, new down

Sep 29 2009 Maurice Glover

Used up, new down

SUSTAINED forecourt demand is likely to push the average price of a used car to £5,600 this year.

And even though the secondhand market contracted by 5.9 per cent in the first half of 2009, a total of 6.8 million models are expected to have changed hands by the end of the year to represent a growth of seven per cent over the last decade.

In contrast, the estimated 1.78 million new cars sold this year will be 31 per cent down on the peak registration year of 2003, according to the latest study by Trend Tracker.

The market forecasting organisation estimates that up to 25 per cent of businesses operating fleets have been holding on to company cars for an extra year before replacing them.

European factories have been cutting the over-production of new cars to remove nearly-new, pre-registered stock from the used market.

And according to the report: 's authors: '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.

'With the increase in average selling prices and the increase in used car sales volumes, the entire used car market value has risen by 25 per cent over the last decade to an estimated £38.1 billion,' claims the report.

Meanwhile, a 56-month high in car production for the UK market during August shows the scrappage incentive scheme has had a positive effect, according to Society of Motor Manufacturers and Traders chief executive Paul Everitt.

'One in three cars built in the UK last month was for the home market and total volumes are starting to stabilise. But underlying demand remains weak and the recovery is still extremely fragile.

'A continuation of the incentive scheme through to the original closure date of February 28 next year would help sustain growth and bridge uncertainties associated with the ending of VAT discount,' he said.

SMMT figures show that car output of 56,737 units in August reflected a drop of 31.5 per cent compared with last year. Home market output was 19,173 units.