Fleet News

UPDATE: Used car prices to fall

Vehicle disposal companies have been warned that a weakening in used car demand and values are forecast and that the decline in values may run into February and March.

EurotaxGlass’s is forecasting that the price of the average three-year-old car could soon be £400 less than in 2007.

It blames the fall on the gloomy economic outlook as well as an oversupply of used cars in the market.

However, the forecast has been met with surprise by the BVRLA.

“We hold twice yearly meetings with the guides and late last year Glass’s was certainly not predicting such falls, saying only that supply was beginning to outstrip demand and that would cause prices to ease,” said the BVRLA’s director general, John Lewis.

“For them now to say that it’s likely to be a £400 fall is, in our view and that of the main information supplier, a very unlikely scenario.”

EurotaxGlass’s said it stands by its predictions, although its managing editor, Adrian Rushmore, added that companies planning to offload their three-year-old vehicles have some good news.

Sharper declines in used car values may be avoided thanks to an expected drop in availability.

“New car sales in 2005 were down on the previous two years, which means that there will potentially be fewer three-year-old cars arriving in the wholesale market this year,” he said.

“However, there will still be pressure on used prices because, even if the supply is slightly less, this is likely to remain too high in relation to anticipated demand.

Traditionally, January sees a rise in used car values as dealers re-stock. But this year, dealers are already carrying surplus stock and there is a greater supply of used cars already waiting to feed into trade buyers.

“Therefore we have not seen the price improvements we would have expected,” said.

“It is important that fleet managers acknowledge what the market is prepared to pay not what the book price is.”

Mr Rushmore said it is critical that the market washes out existing surplus stock before dealers start off-loading their trade-in stock that will come to market in February and March.

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