Used car prices rise as new
routes to market reshape the sector, writes Girish
Gupta.
Go deeper with GlobalData
The used car sector has been labelled
a “dinosaur industry” in its unwillingness to respond to advice
following the deepest recession for 70 years. Professor Peter
Cooke, of Buckingham University’s Centre for Automotive Management,
made the accusation as he launched the 20th edition of the Used
Car Market Report.
The annual report, this year
sponsored by car auctioneers BCA, shows the start in 2009 of a long
climb out of recession, even as new and used car volume sales
reached their lowest points since 2000.
The value of used car sales
exceeded £34bn for the first time in 2009, despite a drop in volume
to 6.3m, down from a high of 7.4m in 2006. Average used car prices
through dealers was £7,143 in 2009, up £600 on 2008.
Tony Gannon, BCA communications
director, said: “The UK used car industry has got better and better
at meeting the needs of motorists, providing a broad range of
product at every price point, with a range of value-adds such as
warranties and servicing packages that take the worry out of
choosing a used car.
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By GlobalData“The market is supported by an
increasingly sophisticated wholesale sector that is harnessing
online channels and the latest logistics technology to remarket
vehicles swiftly and efficiently from one owner to another.”
The market value of the
private-to-private sector has dropped by more than 20%, from
£6.95bn in 2008 to £5.57bn the following year. The average price
remains flat at around £2,500.
The average age of vehicles on the
UK’s roads rose from 5.53 years in 2008 to 7.06 years in 2009.
Cooke said: “Look at your new cars
as being used cars. Look further down the line, and retain absolute
sensibility to what’s going on in the marketplace. Watch the
auction houses; be willing, if necessary, to have a certain degree
of flexibility when cars are replaced. There is a fabulous amount
of information available in the marketplace so use it.”
Cooke said that small and
medium-sized leasing companies and fleet managers find market data
difficult to use.
“My concern is the fleets maybe
have 50 vehicles on a four-year replacement cycle. That’s about a
car a month. You don’t really have time to watch that. Yet, there
is a lot of money potentially being wasted,” he said.
The report involved research group
BRMB asking a number of questions designed to ascertain what
influences buyers of used vehicles. Dealer advice is now seen as
less important since so much advice is available online. A total
18% of the 4,000 interviewees cited internet advice as a major
factor in buying decisions.
Nearly half, 44%, of dealers, had
no further contact with buyers following a sale. Cooke suggests
dealers should initiate a rapport with customers, making follow-up
phone calls in order to continue business and to bring in friends
and family.
“The buyer feels they’ve got a
relationship with the dealership for the next time around when they
come to replace that vehicle. On the one hand you’re looking to
assure the customer of your current car. Also, you’ll have friends
who would want to buy a car,” he said.
The report is available to download from the
Buckingham University website for £30.
