CAP, publisher of the Black Book car price guide, has warned that there’s a “shadow hanging over the market” for used cars. The company says that a stable first quarter in which new and used car values prospered, at odds with the economy at large, may be followed by a “gradual erosion of values at most years and for most models”.
Drop in used car values could be imminent
It attributes this prediction to an increase in the number of new cars being sold to rental companies and “aggressive incentivising” of new car retail sales. The flooding of the market with cheap new cars, CAP says, will inevitably result in a knock-on effect for used car values, and the fact that many of these new cars will be re-released to the market six to nine months later when their time with the rental companies is up won’t help matters.
And while the mass-lowering of the values of humdrum everyday fodder might not seem of much concern to us here at PH, it should be – a drop across the market will have an effect on the more interesting end, too. Great if you’re planning to buy; not so much if you’re planning to sell.
"Free-fall" is not expected, according to CAP
All is not lost, though – CAP also notes that strong retail demand for second-hand cars in 2013 means that prices may not drop as hard and as fast than they could. Black Book Live senior editor Derren Martin said: “Whilst we are sounding some cautionary notes about the on-going picture for trade values, we do not expect the market to go into free-fall. Values may well drop for the reasons we have identified, but they have not done so for some time. Depreciation is a fact of life, and we should not be too downbeat that it is happening again.”