For the last few weeks buyers have been queuing up to purchase sub £5k small to medium sized cars which are seen as a lower risk from the ravages of depreciation and are usually cheaper to insure, tax and maintain.
Although the trend towards downsizing would normally mean customers opting for this segment of the market in a recession, this has bought private and retail buyers alike out to either trade out of more risky expensive models or in the face of worries about jobs and financial security to rid them of the burden of a monthly payment.
The downside is that with more people opting for this price bracket the demand will start to outweigh the supply, which is why auctions have been packed with buyers and many dealer groups and other large auction vendors have been reporting market contradictions with large profits on their auction trade-ins. Indeed some dealers are saying that their auction sales are one of the few avenues to make a profit in these demanding times. As we have often reported, however because of the apparent fear of large expensive 4wd cars some dealers are indicating record sales as consumers who don’t have a trade in look to take advantage of some amazing deals on this kind of product.
The interest rate cut should have a great effect on the ability to sell more cars as money in theory should be easier and cheaper to borrow but as we’ve seen finance decline rates are actually increasing and the banks are reluctant to fund some major dealer groups stock, meaning they have no way of retailing their way out of the problems they are facing thus leading to cuts and job losses.
The banks have a lot to answer for and the governments much talked about claim to ensure they start lending again and stimulate the overall market seems to falling on deaf ears!