Increased supply, reduced demand and lower quality means used car prices are dropping

A tidal wave of nearly new cars arriving on the second hand car market are forcing down prices.

The rise in volumes is seen as “the biggest threat to overall price stability,” as stated by Cap Black Book.

“We have consistently identified late plate supply as a critical factor in the residual values strength of the market after the lessons of last year’s dramatic upswing.

“Iincreased late plate supply weakens values and this ripples down through the age bands,” it said.

“There are now signs of an increase in nearly new supply and this can be seen in the volume of sub-12 month stock advertised on one online source rising by 20 per cent between April and May.”

There are three aspects in play affecting eventual prices; reduced retail demand, increased supply and a deterioration in the quality of many of the cars being offered in the open market..

“A large and increasing number of vehicles which are not in clean condition are failing to sell at all.

“This is not because there is no market for anything but the best cars, rather because many vendors have been refusing to accept what are in truth fair bids that reflect the investment required in refurbishment.”