Older Cars Market Trends - July 2010

The distractions of the General Election, the World Cup, and the recent Budget setting out the austerity measures that face the nation, have all taken their toll on retail sales of used cars. In spite of the retail downturn there were fewer older car bargains to be found at the auctions.

Prices at the older end of the market have risen gently for much of this year, and they have more than held their own in recent weeks when the wider market was experiencing a marked downturn. This comment is specifically aimed at ‘ready to retail’ older cars that remain popular with dealers who have been keen to source these cars for stock.

This has necessitated dealers looking beyond the auctions.Along with searches of the usual classified websites and online auctions, ‘cars for cash’ adverts have been bringing in some retail stock. Despite this, independent dealers are still struggling to find good cars. Much of what is offered by the bargain basement merchants is distinctly second-hand: not what most customers want to buy.

Analysed incorrectly, this can create the illusion of a slow market when, in fact, the market is only slow for the wrong stock. Those who buy and sell well prepared and presented cars from good homes continue to be successful.

Though margins for good cars are stable, net profit from under-par examples is on the wane but this may not be such a disaster if turnover can be maintained. Deciding where to draw the line on the condition of cars sold, versus the number of low-margin deals chased in a month, is a fine line that some traders walk daily. This is not the business model for those who believe the customer is always right.

Small cars continue to top older car buyers’ lists, with small diesels especially high in the popularity stakes. The evergreen Peugeot 106 is a budget buy stalwart and five-door petrol-engined Clios are also popular, particularly when they qualify for cheap road tax.

The biggest downside to small and medium diesels is that, compared to their petrol cousins, engine problems can amount to an expensive repair. Cheaper road tax is a major point in favour of the up-to 1.2-litre petrol engines seen in cars like the 106: bigger diesel engines do not qualify.

In diesel-powered medium and upper medium cars, those with sound diesel reputations, like the Peugeot 306, are always sought after. The soft lines and smooth metallic shades offered on the 306, particularly special edition versions like the Meridian, make it a popular older choice.

Upper medium is all about condition. Tidy cars with uncracked bumpers and rust-free wheel arches are always good sellers, but they are few and far between. Toyota Carina is a good buy in this sector, though a smaller Corolla of similar age and mileage will often fetch a higher price. Honda Accord is another good seller in this sector: 2-litre diesels being the best.

Larger cars and MPVs are hard to find without the wear and tear associated with family use.  The best sellers here are Toyota Previa and VW Sharan: 2 litre petrol or 1900cc diesel. A low-mile diesel is very rare and worth a pretty penny in online sale. Trim levels make little difference at this size, as space is the primary goal. Leather trim is well liked for its wipe-clean properties. A towbar is another big plus.

Towbars and 4x4s go together like apple crumble and custard. Gone are the days when towing took money off older cars: these days, versatility of purpose is a valuable USP. Small or large, 4x4s have been coming back. Smaller, modern-styled 4x4s are popular in three-door guise; Toyota RAV4 in particular. Prices for a three-door RAV in good condition will often exceed even the highest expectations.

For larger 4x4s, Landcruiser is the one to beat. Diesel Landcruisers with manual gearboxes are undoubtedly the most popular large 4x4s available: everything else is lower down the price ladder. Build quality on Range Rover and Discovery simply do not compare to the well-assembled Toyota, and Mitsubishi Shoguns are simply not of the same mechanical quality.

Older convertibles are largely toys that rise and fall with the seasons. With so many projects around: cracked plastic rear screens, torn hoods or rusty sills and floors, most people keen to buy a cabriolet will look to newer plates. Prices for unloved older soft tops can often be very depressed at auction. The current up and down weather is not supporting values much, nor is there anything like a shortage.

Best performers are the prestige badges: Audi, BMW and Porsche. Hardest work would be older medium cabs: Escort, Astra and untidy Golf. Golf may seem surprising, but there are plenty of nice ones around for under £2,000. Paying £600 for a shed makes no financial sense.

Prospects for the months ahead: all systems are most definitely go for well-presented cars with sensible miles and some history. Supply of these cars is unlikely to pick up, which only means one thing. Everything else runs downhill from there – apart from large 4x4s, which will keep making money as we head into Autumn.