Used car supply drought
March 1st, 2010 by Richard Aucock
CAR dealers will face a severe shortage of used car stock in 2010 due to plunging new car sales.
Supplies of 1- and 2-year-old cars are to face a ‘major reduction’.
Scrappage has compounded the problem further, warns Glass’s Guide editor Adrian Rushmore – 300k new car sales were generated from it in 2009, but these buyers have traded in much older cars than normal.
They are thus unlikely to follow the regular 3-to-4-year replacement cycle.
Result? ‘The availability of part-exchanged cars from 2012 will reduce still further.’
It means car dealers will face big problems sourcing 1 and 2-year-old motors, says Rushmore. The only saving grace is that previous strong years mean there are plenty of 3-to-5-year old cars still on the market.
‘Used cars up to 5 years old are the lifeblood of the dealer trade. Dealers currently account for around 87 per cent of sales of up-to-2-year-old cars, and 77 per cent of 3- to 5-year-old cars.’
Rushmore adds another warning to car dealers, too – the recovery will be slow, as the market is only expected to hit 2 million again in 2012.
The flipside, of course is better retained values. ‘A constrained new market in the medium term will continue to keep future used-car supply in check, to the benefit and slight improvement of long-term residual values.’
Tags: glass's guide, rv, scrappage, used