BOTH franchised and independent used car dealers are reporting that the retail market is getting tougher. The country has seen a massive slowdown in showroom traffic. Used car prices have been sustained by strong sales activity in the past three months, but the lack of trade is slowly bringing them down and making used cars look very good value for money.
Many dealers feel the downturn is only temporary and that as cars appear at the lower prices, even the most cautious buyers will return. Rental companies are feeling the pinch as they are once again having to actively sell cars rather than relying on the phone ringing and dealers or supermarkets simply placing orders. Despite the drop in retail activity, there is still a shortage of good clean low-mileage cars. In terms of ex-rentals, Ford vehicles are in demand and a shortage of Fiesta and Focus means they are making particularly good money, although Mondeo ST24 is causing concern as stock builds up.
The feeling in most quarters of the motor industry is that used cars will be in short supply throughout late spring and early summer, as many new car buyers wait until September for the new format number plate. This will support values in the short term, but will compound the problems of over-supply in the last quarter of 2001.
I went to a light commercial auction this week and was surprised by the poor quality of some of the vehicles going through. I imagine that most were unroadworthy and certainly the majority would not pass emissions tests. There is a market for these vehicles if only because some buyers have a £500 budget.
However, some should surely be withdrawn from use, if not by the authorities then by the last user, on safety and environmental grounds. There was one minibus in particular that I would refuse to travel in. Disposers must look at the vehicles they are selling and make a hard decision about whether a bit of profit should be made or if the vehicle should really be scrapped.
Martin Ward, CAP Network national research manager