Used small-car market shows signs of recovery

The HPI Used Car Valuations Index has shown that there are some signs that the market for used-small cars and used-superminis is recovering despite the credit crunch.

HPI has reported that three-year old City cars and Superminis are beginning to see the rate of depreciation level out, offering some encouragement for a market which has been challenged greatly by the economic downturn.

There was a year-on-year decline in October for all 12-month old cars increasing on average from over 20 per cent to 24 per cent.

Three-year-old cars have slipped further from a decline of 25.5 per cent to an even more worrying 28.1 per cent. The picture is even more alarming concerning three-year-old petrol cars whose depreciation in value has increased from 27 per cent to a sky-high 30 per cent.

Added to the understandable lack of consumer confidence, is the shortage of quality wholesale stock.

HPI’s valuation expert, Martin Keighley puts this down to dealers not doing enough retail business to generate the usual number of part-exchange vehicles.

He also believes that many dealers are keeping "older-than-usual swappers" as retail stock.

Mr Keighley said: "Manufacturers continue to tell us that new prices have to keep rising due to increased costs, but this logic flies in the face of a true market where house, used vehicles and even oil prices are falling.

"Used values for November are generally down apart from smaller cars which remain stable. We can expect further falls for December."

Written by James Christie

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