Mr and Mrs Average could come to the rescue says HPI
Although the outlook remains unsettled going into 2009, January saw some used car values go up. The latest HPI Used Car Valuations Index shows that the month-on-month figures for December to January show that on average values are up for all 12 and 36 month old cars. However, the new year usually sees an increase, so the worst is not over yet.
Martin Keighley, HPI’s Used Car Valuations expert explains, “New car registrations were around 2.1 million in 2008, down from 2.4 million the previous year, but a great chunk of these were ‘self registrations’. Stocks of some new and nearly new cars and light commercial vehicles are growing. Expect new car sales to fall to between 1.5 and 1.6 million in 2009, but perhaps the tide is beginning to change for the used car market.
“Job losses continue to hit the headlines and people are worried whether they will be in work this time next year. On the other hand, Mr and Mrs Average could be feeling far more comfortable in their jobs. In addition, they now pay less for their mortgage, fuel, food and clothes, which means they haven’t been this well off for a while.
“So where should they put their cash? Savings accounts are now almost pointless, the Stock Market is unstable and because the Pound is so weak it’s not worth going abroad. So will Mr and Mrs Average come to our rescue and bag themselves a Used Car bargain? 2009 is going to be a buyer’s market, so dealers would be well placed to focus their energies on this target audience.”
January used car values are generally higher than they were in December. This year the 12 month petrol sector saw a rise of over 6% and diesel was up 0.4%. Looking at 36 month vehicles, the petrol sector was up 6.8% and diesel is up 6.6%. However there is also the fact that in January a three year old car was registered in 2006, whereas in December it was registered as a 2005 car.
Year-on-year used car values continue to depreciate, with the fall increasing by 1.0% to -28.1% for all cars at 12 months and 0.8% to -33.9% for all cars at 36 months. Interestingly, the 12 and 36 month petrol sector saw values stabilize for the first time in many months. Looking back at the market in January 2008, however, things were still relatively buoyant, but a year on, things are patchy to say the least.
Keighley concludes, “Overall, some sectors show signs of improved confidence and it won’t shock anyone to hear that the City, Supermini and Small cars continue to lead the charge. In fact, unexpectedly, some Luxury and 4×4 petrol models are showing signs of perking up, with some firm evidence that certain ‘undesirable’ vehicles are selling again.
“The massive used value falls, combined with falling fuel prices means some larger vehicles are now looking very cheap indeed to buy and run. Clean, sensible mileage stock will always be in demand, but Ready to Retail (RTR) prices (rather than trade prices) are the norm for these in both auction and trade environments which consequently, is squeezing retail profit margins on these ‘desirables’. Although it’s not over yet, there could be some light at the end of the trouble for dealers.”