Fleet News

Used car price crash claim: trade hits back

A HIGH-profile story in the national media about the collapse of the second-hand car market has provoked an angry response from the fleet industry, which claims prices are still sound and that the 'misleading' figures could destroy confidence and push values down.

A number of senior figures from the disposals and secondhand market have contested the claims, published by What Car? magazine and the Alliance & Leicester which ended up in The Independent, on BBC Breakfast News and Radio Five Live, that the value of three-year-old cars on the consumer market had dropped by 13.5% and one-year-old cars by 11.4% since June 2002.

Such a fall on the consumer side of the used car market would have a catastrophic effect on the residual value of fleets, wiping millions of pounds off the value of cars at auction.

The UK's two major auction houses, BCA and Manheim Auctions, who would see trade prices drop through the floor should consumer prices fall by such large percentages, were scathing.

Tom Madden, BCA's director, customer affairs, said: 'The report from the Alliance & Leicester is certainly headline-grabbing but it bears little relation to our experience in 2003.

'To say the used car market is collapsing is a misleading statement and it bears no relationship to what BCA, motor retailers and professional wholesalers have experienced over the past 18 months.'

John Bailey, chief executive of Manheim Auctions, said: 'We question the figures quoted in the report. In late May the supply of used cars increased as fleets who had extended replacement cycles disposed of older stock.

'Prices achieved at auction were reduced but not by 9% and 13.5% respectively as the report suggests. These figures are out of touch with the market.'

Martin Ward, national research manager at CAP, added: 'The market will be extremely concerned about this report as confidence is fragile and issues such as this can damage prices. Taking the standard CAP Index, underpinned by a comprehensive basket of vehicles representing the overall market at three years/30,000 miles, trade values are actually up year-on-year by 3%. The CAP Fleet Index, representing the heaviest volume cars and therefore most susceptible to value pressure at three years/60,000 miles, is down by just 0.8%.'

Alan Cole, editorial consultant at Glass's, added: 'Our figures show that when comparing July 2003 prices to the same month the previous year there was a fall for the entire market, but only slightly and nowhere near to the extent the Alliance & Leicester report suggests.

'Up to spring this year used car prices for one and three-year-old cars were actually up. It is not doom and gloom.'

What Car? and the Alliance & Leicester obtain the figures through analysing a basket of 10 to 15 cars, which are then linked to an index weighted by current sales volumes, which is then weighted 'according to the most up-to-date buying patterns'.

Rob Ahern, editor of What Car?, said the figures reflected what was being seen at the consumer end and that margins on the forecourt were being 'cut to the bone'. He added that it looked as if second-hand car prices would continue to weaken.

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