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Used car industry 2012 roundup

The British used car industry has enjoyed a quietly successful 2012, as demand returns to the market and restricted supply drives price performance.

The imminent onset of the festive period has seen a slight dip in prices in November but, by and large, dealers throughout the country are feeling positive about a market that is stable with hints that price rises might be around the corner.

Q3 price “rise“

The headlines may have been about a price rise in the third quarter of the year but, in reality, prices stayed where they were between July and October.

The Auto Trader Retail Price Index showed the average used car retailing at £8,711, a whopping £2 higher than the previous quarter. But when comparing year-on-year figures, green shoots were very much in evidence.

Septembr 2012’s average prices were up 2% on September 2011, the first year-on-year increase since April 2011, and Q3 2012 was up 3% on the previous year in London and the East Midlands, and 2% elsewhere.

Restricted supply

While demand is returning – perhaps an indicator of a return to cautious consumer optimism - the principle driver of the increase has been the lack of good-quality stock.

Buyers are being forced to compete for the slim pickings at the top of second-hand market and that is pushing top-end – and therefore average – prices up.

Internet even more important

Consumer competition is being driven by the continued growth of the internet as the research tool of choice. With a range of dealers and cars at their fingertips, buyers are using the internet to source the best deals, rewarding dealers that are prepared to buy the best cars available, or put work into getting non-road-ready vehicles in good condition.

Clouds on the horizon?

Second-hand dealers will paint a largely optimistic picture of the industry but things are far from perfect. While inflation sits at around 2.2%, business running costs are growing at a rate of 6.7% year on year, with energy and fuel prices the main culprits.

Small business associations fear a cold snap could put many new and small companies out of business – though it would at least be good news for the many dealers that bought 4x4 cars in anticipation of difficult weather conditions in 2011 that failed to materialise.

Dealers and other companies in the motor industry, are well advised to look to renegotiate existing deals on power and insurance, so as to reduce costs where possible. Brokers are looking to pass on the benefits of their buying power and DNA Garage Insurance and DNA Motor Trade Insurance offers good value, tailor-made coverage.

Bad finance?

The final issue facing dealers going into 2013 is the outstanding finance remaining on vehicles they hope to acquire.

The issue first came to light halfway through 2012, with Experian announcing that over a quarter of cars being researched were subject to outstanding finance, making it the principle risk faced by dealerships.

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