The market value of nearly-new cars is likely to hold up better as volumes fall in the wake of collapsing new car sales, according to experts at EurotaxGlass’s.
They said the number of used vehicles being offered for sale at the end of 2008 was about 35 per cent lower than in the same period in 2007, when supply far exceeded demand.
A direct result of far fewer dealer self-registrations, this should mean that values of younger used cars are now less likely to continue to fall as heavily as had been the case just a few months ago.
“In late-2007, the supply of ‘57’-plated cars significantly outweighed market demand,” said Adrian Rushmore, managing editor at EurotaxGlass’s.
“By contrast, the number of ‘58’-plated vehicles appears to be more manageable. Many dealers still have on their books a significant number of cars at or just over three months old, but in general they are not overstocked – at least, not to the extent that they were 12 months ago. In particular, there are fewer ex-demonstrator vehicles to dispose of, meaning values of cars of this age may come under control after many months of severe falls. They are still likely to continue to decline but at a more gradual rate.”
Rental companies are contributing to the improvement in values by retaining cars for longer periods during the downturn, reducing the quantity of ex-rental stock arriving on dealer forecourts.
Glass’s says the trend is likely to continue into 2009 and will be exaggerated by the fact that manufacturers are expected to further restrict supply to hire-car firms, thus limiting used-car volumes in the second half of the year.
“Longer periods of retention will mean ex-rental cars could have around 20,000 miles on the clock, rather than the more typical 14,000. Whether this suits potential car buyers remains to be seen,” said Mr Rushmore.