Trade is going down - but how far will it go?

##CAPsml--left####Martin Ward--right##I SPENT much of last week going around dealers, both franchised and used cars, and to various auctions. There is, to say the least, complete confusion within the trade.

There are two very different views as to what the future holds, short and long term but in terms of values everyone is thinking along the same lines. They believe that there is only one way prices will go from now on and the debate is only over how much.

Some dealers are very depressed due to a complete lack of showroom traffic, but they are compounding the situation because of their mental attitude. When a customer does walk in, their mood remains miserable and potentially off-putting.

Other dealers are taking a more realistic stance and revaluing their stock at today's money. They have decided to bite the bullet and re-price on the forecourt, creating a sale effect and attracting retail customers.

Making a decision to sell cars at a loss is a brave move, but the only thing to do to keep things moving. There is a feeling that 'new money' is just around the corner but those left with stock at the old higher prices will inevitably suffer more by waiting for it than if they take the medicine now.

The public will only buy cars now if they can be tempted either by value for money or by making them both irresistible and affordable. They realise that prices will fall, as they always do at this time of year, but this year it has been exceptional for many reasons.

It may be an understatement to say that the job has 'gone off', but it has, and few see it returning for some time. Dealers are having to work harder just to stand still, but those who pay extra commission to salespeople and offer them incentives to move the metal will survive, as opposed to those who want to curl up and die in a corner.

The trade is generally stocked up with part exchanges from the September intake and those cars are now sticking in the current climate of uncertainty. The motor industry is feeling the pinch like almost all other businesses. Values of cars are at an unrealistic level as the trade bids, not necessarily to buy them, but on the off chance that they do come at that money. A member of my family has a 1998 Peugeot 106 to sell. It is one owner, covered 30,000 miles, bright red, a nice desirable retail car.

It should be worth around £3,400 but having taken it to various dealers, only one out of 12 put a bid in for it. The other eleven all said that they couldn't buy it for various reasons - they are overstocked, it doesn't have power steering, it's the wrong colour, and so on. This is just one example - the cars around for sale number into the hundreds of thousands, and every one has a story.

Another major factor that is easing values down is the number of new imports available at a variety of car supermarkets and dealers. Many new dealers are saying that these are becoming a significant part of their profit and that without the imports, things would be a lot worse.

But with such good deals being offered on new UK cars, together with the large number of imports, pressure is being put on nearly new vehicles.

The other main event that makes the public buy a car or not is, as history has proved, the weather. You can't give a used car away if it is pouring down with rain or snowing, or if it is a glorious summer afternoon when the barbecue begs to be lit. The weather has to be right to make a decision on a used car and this, regardless of anything else, will never change.