Will there ever be too many (normal) used cars?

[Garlick]

As it was such a nice day yesterday (sarcasm) the Mrs and I decided to head to the coast for a nice day out. As I drove down the motorway it was the usual collection of new (up to four years old) hatches and saloons in the usual metallic colours with a variety of diesel engines, the odd estate and MPV thrown in too (metallic, diesel).

As the Mrs snoozed I started thinking about the used market. Now, I can see how there will always be a market for interesting cars (and yes, I include shed barges in that description) but surely there will be a time when the market will just offer a mass of silver diesel hatchbacks/ saloons and residuals will plummet as a result, no?

Is it not going to go the same way as the house market, and an £18k Passat will be worth hardly anything is a year or two down the line? What with all the private finance deals, leasing deals and company cars the used market us about to be flooded, isn't it?

Has it already started? Just curious as it's not a market I usually take much notice of.

[kambites]

The markets sort it out - the more used cars there are for sale, the more they fall in value and the less attractive it becomes to buy new. We already have some of the highest rates of depreciation in the world because we have more of an obsession with buying new than anywhere else.

Personally, I hope it continues. Depreciation is great.

Edited by kambites on Monday 5th March 11:56

[Garlick]

Well, quite. But can the market sustain the sheer amount of similar stock now out there. Supply with surely outstrip demand (and those that can afford to buy a nearly new used car these days)

If market dictates, even I could be tempted with a very cheap, nearly new Golf diesel when the bottom falls out of the market

[kambites]

I don't quite understand what it would mean for the market not to sustain it. Cars always have a value of some kind, even if it's only as scrap metal. It's just supply and demand.

We almost certainly already scrap cars younger on average than anywhere else for this very reason.

[davepoth]

How long is it since the end of the scrappage scheme? I think it's 3 years now, so we'll be looking at a bit of a glut I reckon.

[veevee]

It's always confused me why people would even want to buy, say a boggo Focus 1.6, brand new. Fail to see the point, but as the poster above said, the UK seems to have an obsession with new cars. That said, there seems to be a reasonable market for most things right down to scrap value?

[Garlick]

kambites said:

I don't quite understand what it would mean for the market not to sustain it. Cars always have a value of some kind, even if it's only as scrap metal. It's just supply and demand.

We almost certainly already scrap cars younger on average than anywhere else for this very reason.

You're right, but I can just imagine forecourts full of silver Mondeo/ Passat/ Insignias that nobody wants....I guess they just get cheaper until someone bites, as you say.

[MX7]

I think we'd almost be there now if we hadn't had the Scrappage Scheme.

[D1bram]

I think it's already the case tbh.

Looked at new cars recently as I need a new company car soon. A mid spec diesel Astra with the tax efficient derv engine is around £23k new now.

A three year old version of this (albeit a different shape model) can be had for under £5k.

Potential for horrific depreciation that given the type of car it is.

[Manks]

Garlick said:

As it was such a nice day yesterday (sarcasm) the Mrs and I decided to head to the coast for a nice day out. As I drove down the motorway it was the usual collection of new (up to four years old) hatches and saloons in the usual metallic colours with a variety of diesel engines, the odd estate and MPV thrown in too (metallic, diesel).

As the Mrs snoozed I started thinking about the used market. Now, I can see how there will always be a market for interesting cars (and yes, I include shed barges in that description) but surely there will be a time when the market will just offer a mass of silver diesel hatchbacks/ saloons and residuals will plummet as a result, no?

Is it not going to go the same way as the house market, and an £18k Passat will be worth hardly anything is a year or two down the line? What with all the private finance deals, leasing deals and company cars the used market us about to be flooded, isn't it?

Has it already started? Just curious as it's not a market I usually take much notice of.

I remember when I first started driving (mid 1980s) there was a strong market for most used cars. Put an advert in the Auto Trader or local paper and more often than not the phone would start ringing immediately and the car sold within a couple of days. In fact the market was so good that friends and family of Auto Trader employees used to try to get at sellers before the wider market had chance to read the paper.

I am not sure when things started to change but change they have, there's a lot more supply out there.

[jas xjr]

i woud say the used car market is already flooded . but when am i comparing it to ? when i bought my first car in 1981 my budget was a healthy £1500 . trust me when i tell you that there really were not many decent cars available.

last night just looking through the classifieds , as you do there were hundreds of cars that i would buy , for around £1000 or less . alfa 156 estate v6 with leather £1000 , for example.

i know people want economical cars , but for me at the moment that looks like a bargain

[Cockey]

In Singapore, each car requires a Certificate of Entitlement in order to be on the road. They cost about £30k each and expire after 10 years. This means, unless you're willing to pay another £30k to renew it for a further 10 years, the car gets scrapped (or maybe exported if worth enough).

Safe to say, you don't see too many 10+ year old cars on the roads over there. So glad I live here!

[Codswallop]

Given how complex the current crop of 4 year old cars are, I think mundane stuff will become more throw-away than ever before, hence we will see far more cars being scrapped. Why would someone spend £1500 on new electronic boxes when they can pick up another cheap used car instead?

I think that should deal with the used oversupply nicely, much to the manufacturer's glee.

[Garlick]

I guess that spec will become ever more important, as will service history.

Not got climate or nav? Missed a service? Punter will just move along to the next, similarly priced diesel hatchback.

Maybe extended warranties will help buyers peace of mind, who knows.

[kambites]

Garlick said:

I guess that spec will become ever more important, as will service history.

Possibly, but if prices get driven that low, we'll be at the point where the whole car is worth less than the desirable options cost, so it would be a daft reason to spec things you don't want when buying the car new. You'd be better off buying without them and then scrapping the car.

[Garlick]

jas xjr said:

last night just looking through the classifieds , as you do there were hundreds of cars that i would buy , for around £1000 or less . alfa 156 estate v6 with leather £1000 , for example.

i know people want economical cars , but for me at the moment that looks like a bargain

Agreed.

I was recently looking at late(ish) Range Rovers and you can't help but notice the petrol/ diesel difference.

Fully specced V8 petrol examples with low miles were much cheaper than higher mileage, less well specced diesels and as a chap who doesn't cover that many miles per week the savings are tempting.

Seems the UK buyer wants diesel, nothing else will do.

[Wigeon Incognito]

Codswallop said:

Given how complex the current crop of 4 year old cars are, I think mundane stuff will become more throw-away than ever before, hence we will see far more cars being scrapped. Why would someone spend £1500 on new electronic boxes when they can pick up another cheap used car instead?

I think that should deal with the used oversupply nicely, much to the manufacturer's glee.

Agreed. It does concern me though as I don't see any of the new stuff as a viable banger in years to come, nor do any of the new models appeal to me enough to pump money into maintenance. That leaves the newest metal that appeals being from the 90s and supply is dwindling fast so what do I buy in the future?

The Scrappage scheme has a lot to answer for.

[Garlick]

kambites said:

Garlick said:

I guess that spec will become ever more important, as will service history.

Possibly, but if prices get driven that low, we'll be at the point where the whole car is worth less than the desirable options cost, so it would be a daft reason to spec things you don't want when buying the car new. You'd be better off buying without them and then scrapping the car.

Again, I agree. That's the sensible chaps opinion anyway. To the average car buyer (who see it as an appliance, albeit an expensive one) they will be in a position to be a lot more choosy.

It's almost like selling a house now, in that if you do manage to get a buyer on your drive you need to do all you can to get that sale.

[C.A.R.]

I sort of see what you're saying.

I've always bought interesting cars - convertibles and fast(ish) cars and those which look good. I'm a bit of a special case being on my eighth car at just 23...

However now that I am starting to gather more commitments in life - starting a small family, having to afford rent - I'm now looking for a diesel hatchback. The market is absolutely heaving with cars in my budget so finding something remotely interesting or different from the normal, grey specification is actually pretty tough.

Dealer I spoke to on Friday however said (about a silver focus TDCi) that they don't hang around for sale for a long time. So I guess at present, there is definitely the demand...

[JREwing]

I think the ship has sailed on this one. Depreciation is already savage on cars like this as the market has been flooded for years, largely to do with the UK company car culture. If a car is a stupid colour or has steel wheels, has the wrong engine etc then God help you get it's theoretical value on resale.