Used car prices and simple supply and demand

We canvassed the opinions of our insiders and colleagues as to what was hot and what was definitely not at present. As you can imagine there were the usual regional differences and seasonal adjustments for cabs and MPV’s but the overriding impression we have is that cars which fall into the category of ‘unique’ in some way are the big winners.

Not unique in terms of exotic, expensive or unremitting awfulness necessarily but things like unusual colour or very high spec or a model that’s hard to get hold of.

If buyers are searching for cars with a long list of “must haves” the choice becomes much more limited and therefore the dealer can charge a premium for that kind of model in the very real hope that there will be another buyer who is prepared to pay top dollar for the right car.

We have examples of exceptionally low mileage cars attracting large uplifts over average mileage where buyers are looking to get the absolute best for their money.

The other interesting dynamic is that in a recession buyers look for bargains and will default to cheaper cars. However our research tells us that whilst budget is a major consideration looking for the best in class is more important. This may indicate that budget brands will gain some real traction in the coming years and should improve their brand standing immeasurably.

With all the negativity surrounding a lack of access to funding, dealers are reporting record finance penetration figures and higher profit returns as lenders again ease up on their criteria for borrowing and introduce some much needed fluidity to the market enabling car dealers to compete favourably with high street lenders.

Another interesting factor is that buyers are increasingly looking to maximise the value of their existing car and rightly ensuring that dealers work hard to give them the very best price for the part-exchange, especially if it is a car which can be recycled into another retail unit by the dealer.

Whilst realising that a lot of this is anecdotal, all in all the general opinion is there is a real feeling that dealers need to work harder on profiling their stock into best sellers and best profit generators, against best price which gives buyers a simple choice. If they want high spec, top colour, low mileage, trendy example they need to be prepared to pay the money and if they want a value for money, cheap base model car they should be asking for a great deal.

The simple way of finding out what bracket your car fits in is to go on the used car locator for that franchise and punch in your requirements and see how many cars come up in the search, if there are very few pay the price if there are plenty get haggling!