Used car market takes a hammering

Information about the new car market is readily available, but it's far harder to track trends in the highly fragmented market for second-hand cars. Now, a wide-ranging new report published by British Car Auctions (BCA) fills the gap with a wealth of detail. It provides plenty of depressing reading for the trade but also concludes that the recession hasn't produced the sort of market meltdown that might have been feared.

The analysis ("The Used Car Market - A 2009 Report by BCA"), prepared by Professor Peter Cooke at the University of Buckingham, draws on a wide range of sources and estimates that used car dealers sold 360,000 fewer cars in 2008 than they did the previous year. In fact, at 3.67 million units, the number of used cars sold by dealers dipped to a six-year low, and their revenues from those sales fell by £1.7 billion to £24 billion.

Dealers are also being hit by the rising number of 'private-to-private' sales that by-pass the trade completely; 2.69 million cars changed hands this way in 2008, at a value of £7 billion, an increase of £1 billion over the previous year. Only a modest increase in the average values of used cars prevented the drop in dealers' revenues being even larger than it was.

Professor Cooke's report also contains the results of survey work designed to gauge the attitudes of customers to the used car trade. It comes as no surprise to find that customers are looking for "the right car at the right price" or hope to be dealing with "friendly, helpful and professional staff" but the impact of the recession can clearly be seen in the fact that 40 per cent of customers gave "unable to afford a new car" as their reason for buying used.

The next future challenge for used car dealers? How to make money at a time when weak sales of new cars mean that the second-hand car market will in future increasingly be starved of supply.