New research has shown that used car prices have fallen but nearly-new car prices have increased as cars sold in Britain are getting older.
The Auto Trader Price Index showed the average price of a used car fell by 1.5% in 2011 whereas cars aged between 0-3 years increased by 6%. The change in price is due to motorists holding on to their car for a longer amount of time and the lack of new cars being made. The index also showed that cars which were 10 years or older had a 6% drop in price compared to nearly-new cars.
Motorists see nearly-new cars as a good alternative to brand new cars as new purchases lose value as soon as it’s taken off the forecourt.
The price decrease for used cars would have been greater if prices hadn’t picked up in the last two months of 2011, which saw an increase of 1.45% in November and 1.54% in December with the average price of a used car standing at £9,155.
The findings highlight that people are keeping their cars for longer as household bills soar, less credit is available, cars are becoming more reliable and the ongoing costs of living continue to increase.
Tim Peake, strategy Director at Auto Trader, said: “The impact of reduced new and used car transactions, created by relatively weak consumer demand, is leading to an ageing vehicle pack and hence lower overall retail prices for used cars, as evidenced in the latest Auto Trader Price Index.
“However, what’s interesting is that there are clear differences between age segments of vehicles and geographic regions that mean there is more to the headline 1.5 per cent annual fall in prices than meets the eye.”
It is believed the car industry for 2012 is going to be a challenge as consumers are more concerned with unemployment issues and the pressure of household bills. However, buying a car in 2012 can be positive news as average prices falling overall could result in good deals being offered.
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By Amanda Bainbridge