Market Report March 2012: Evolution or Extinction
Autodata report urging dealers to get with the times
By Shahzad Sheikh
Will finance cuts stimulate the market, are there enough used cars to go around, does it make sense to own a Lancer long term, and why insurance companies should calculate depreciation more accurately?
In the latest report from market analysts Autodata, Bill Carter, Head of Valuations once again laments the lack of appropriate prices being offered for used car trade-ins by dealers. With dealers not paying enough for good quality trade-ins, the knock in effect is less used stock in the market.
He believes that recent finance incentives should address the problem to an extent: ‘With more and more outlets offering 1.99% it will be interesting to see how many extra sales the promotion generates,’ says Carter.
‘If the offer does stimulate an increase in sales of new cars, it should prove to be a blessing for the used car market.’
But so does the dealer just agreeing to pay the right price for a trade-in. Carter explains that ‘the general manager for used cars of a well-known group revealed that he is gaining a growing number of customers from his main competitors due to the fact that he is prepared to pay the correct price to buy stock.’
In fact whilst the industry average for trade-ins bought is 6%, this dealer is doing twice that at 12%. ‘It is refreshing to hear that at least one person is not stuck in the past! The message is clear: Evolution or Extinction, the choice is yours.’
Mitsubishi Lancer Depreciation
If you’ve ever rented a car here, it’s probably been the humble Mitsubishi Lancer – the older version. But then it does have a reputation of being cheap and reliable.
With so many coming off company and rental fleets, you’d think there’d be an oversupply and dramatic depreciation. In fact it’s fairly steady, and even the presence of the newer Lancer EX, hasn’t impacted it.
‘It goes to prove that if the price and package is right, and it is couple with a good reputation, the market will always want this type of car.’
Insurance undervaluations
Don’t know if we should bring up this bit of info from the Autodata report, because essentially if insurers cotton on, it could mean an increase in our premiums for older cars. But then Autodata is already spilling the beans to the insurers, so might as well be prepared for it.
Since premiums here are based on the market value of a car, seems that they are potentially undercharging because they depreciate the cars more, so calculate the premium based on a lower predicted market price.
On the plus side, if they do correct it, and you find that you have to claim on the total loss of your car, you should get something closer to its actual value.
