Older Cars Market Trends - May 2010

An insatiable demand for budget priced cars in this period of economic austerity and a limited supply not helped by the crushing of so many clean older cars via Scrappage, has allowed prices to gather a little more pace. Though the Scrappage Scheme has run its course, factory order new cars are still coming through, and Scrappage part exchanges are arriving back at dealerships to be destroyed.

Our contacts report the recent demise of a 17k-mile 99T Polo, a 40k-mile BMW Z3 in need of minor cosmetics and an all-original two door Mark 1 Escort in perfectly usable condition. The market value of all these cars exceeds the amount offered in Scrappage. The Escort had a price tag of about four thousand pounds: twice the Scrappage allowance.

Though there were undoubtedly a few more older cars at auction than in recent months, the ratio of good condition cars on offer was about the same as it has been for the last 6 months. This translates into perhaps 2 or 3 cars in every 10 being of sufficient quality to be classified as retail stock.

Even for the later plates (up to ’03 plate) popular with small independent dealers, as few as 50% of the cars available at some auctions were in retail-ready condition, and this is allowing for normal refurb, missing history and/or high mileage. Despite this, the latest auction data shows rising prices for part exchange stock. 

Prices have steadied for 5-door medium hatchbacks like Golf and Focus, which have been the pick of the bunch so far this year. Though the new March registration plate created part exchanges for onward passage to the auction halls, there was still a good balance between supply and demand leading to steady prices.

Where they were once anathema to the trade, interesting colours have swung the other way, with that added ‘personality’ now worth a premium. On something like a £700 three door 1998 Corsa, the premium might be £100-£150. On a £1,000/1,200 Golf GTi hatch of the same age, special order metallic might be £300 worth, depending on condition. On a £3,000 BMW Cabriolet of the same vintage, special order paint, when offered with low mileage and decent history, is over £500.

In the classic market, European buyers are making all the running. Classics are continuing to leave the UK, bound for Europe and big profits are being made by buyer and seller alike. I recently spoke to a chap who made £20K in under two years of ownership on a BMW M3 Evo, and he is not alone. Anything clean, classic and LHD is returning to the land of its birth, be it France, Italy or Germany.

Elsewhere in the older car market, Japanese 4x4s and premium badges without excessive mileages and good history are selling well to exporters, particularly Eastern Europeans. Prestige MPVs and large SUVs fetch fine prices to such buyers when in nice condition. This includes older Mercedes A- and V-Class, which for a long time were of little interest to the UK market.

The strongest price performers at the minute include just about anything with good history in a decent colour. Private buyers hunting a nice privately-owned older car to run around in for a year will need £1000 in their pocket and will have to travel to find it. Traders should bear all this in mind when pricing retail stock.

The prospects are quite simple: the market is moving full steam ahead for nice older cars. The strength of interest in bargain motoring is unlikely to taper off any time soon.