Prices of second-hand cars plunge as dealers struggle to make profit

Published 13 June 2019

Tough market conditions are forcing dealers to slash prices of second-hand cars in a bid to remain in business - meaning now could be the time for buyers to pick up a bargain.

Share prices of Britain's biggest car dealer, Pendragon, dropped by nearly a quarter this week after it announced it would make a significant loss in the first half of this year.

>>> Nearly-new car prices slashed as demand for diesel drops

The firm operates under the Evans Halshaw, Stratstone and Car Store brands. It's believed the losses are down to uncertainty around Britain's withdrawal of the EU, along with speculation around the future of diesel cars.

Research by HonestJohn.co.uk reveals three-year-old examples of the Volkswagen Golf are available for as little as £8000, while a Kia Sportage of the same age can be found for just £9000. Two-year-old Ford Fiesta models can be bought for less than £6500, while even premium cars are being discounted heavily. A three-year-old BMW Z4 will cost you less than £16,000.

Showroom

At the end of 2018, Pendragon had £458 million worth of used car stock on its forecourts - compared to £372 million a year before. It's now launching a turnaround plan which could see dealers taking smaller profits or even losses on used cars at more than 200 of its sites.

The Evans Halshaw brand currently has nearly 18,000 used cars advertised on its website. It operates a 'price guarantee', which means it constantly adjusts prices to remain competitive. This means buyers are refunded the difference if they a similar model at a competitor being advertised for less money with five days.

Data from British Car Auctions (BCA) - which is responsible for supplying second-hand car dealers with stock and handles 3.5 million cars a year - reveals that cautious buyers have led to the average prices of used cars dropping.

The average price of a second-hand car sold by BCA in April was £9248 - the lowest figure in more than 12 months and down from £10,141 in December 2018.

*All prices correct at time of writing and based on live adverts found at Honest John Cars For Sale

Comments

a-lister    on 13 June 2019

A bit more analysis would be interesting to try and find out what is behind this trend. For example it would be interesting to know which if any models are bucking the trend and whether the availbaility of ex-PCP vehicles is a factor. I would also expect that concerns over diesel are affecting peoples' buying decisions.

Engineer Andy    on 13 June 2019

I think its the diesel factor that's the big one, with many cities other than London now thinking of instituting ULEZ, which means the non Euro 6 diesels will be either banned or be heavily financially penalised for going into them. The other is the general uncertainty in politics and what could happen, not specifically with Brexit, but if it doesn't happen and the Tory government falls.

   on 14 June 2019

What also isn't helping is the obsessive electronic 'safety' culture. New cars have been unreliable with sensor failures that put the car into safe mode for no good reason, followed by excessive billing to 'put right' the fault. The consumer needs to be protected from this childish management of their use of vehicles. Hire companies have reported unreliability from cars as little as 10 weeks old, journalists complain of bogus fault lights on test vehicles. Without regulation it will only get worse with manufactures becoming raiders, only intent on sales not longevity or brand reputation.

Ticklesprocket    on 15 June 2019

I'm of the opinion that build quality & reliability are now so good the average motorist isn't in any hurry to change vehicles solely for an upgrade. My 9 year old TD Octavia still runs like a dream, & regularly runs between Italy & the UK, & all the while it does I'm not going to change it, it has vertually no residual value, so I might as well keep it. & I'm what you would call an affluent senior with the cash to purchase outright.

Edited by Ticklesprocket on 15/06/2019 at 15:25

hudsonblackdog    on 18 June 2019

Your so right. Keep enjoying it until it becomes too expensive to maintain.So many people are caught up in the new car thing, PCP makes this so very easy these days for the private "buyer". Win win for the auto industry & finance companies. If people were to do to maths and look at what that new car is actually costing them over a ten year period they would be stunned. Our consumer society at its very best. I spent 38 years working in the auto industry but I'm still driving a 2001 Berlingo which has been unbelievably reliable suits me fine.

Murray Snudge    on 18 June 2019

My 1991 Ford Escort diesel is also reliable with a mechanical fuel injection pump and no electronics at all.

jm1    on 16 June 2019

I agree with Ticklesprocket. My 12 year old Honda CR-V runs perfectly as does my 29 year old MX5.

Marcus T.    on 18 June 2019

My Sisters CRV is fourteen years old in September. Since she purchased it twelve years ago, it has covered 140,000 miles( much off road). Never been garaged, rarely washed and has only required two new rear calipers and tyres during its life so far.It has full Honda service history, never requires maintenance between services and sails through its MOT every year. I have driven it, and the engine is still sweet.

Tenchman7    on 16 June 2019

More than happy to add to the woes of the secondhand car dealers as my 2003 MK4 Golf that i've owned 13 years today, still soldiers on with no issues to concern me!. Built to last and painted with quality coatings and lacquer, it still looks as good as new.
Nothing built these days and painted with waterbased paint and clearcoated will last much over 7 years if your lucky.
Also helps that my golf chassis and all body panels were galvanized with a zinc coating prior to painting.
Solid mechanicals and a non turbo engine will hopefully see this car last a good 20 years plus!............Tenchman7.

timothyskinner    on 17 June 2019

Tenchman7 - quite right. My 23-year-old 1.4 Mk3 passes its MoT every year with no advisories and has no rust. Never been garaged. Given the price of a new Golf (after the 19% referendum devaluation and with another to come if we do Brexit) I will make do...

Edited by timothyskinner on 17/06/2019 at 14:41

aethelwulf    on 17 June 2019

Why should I replace our two cars. One a 14 year old Mondeo petrol 2l estate just sailed its MOT and is extremely reliable ( springs fixed in year 4 and 5). t is worthless on teh market and VED £290 but cheaper than a new car. Our other car Piccanto 1 9 years old ad again perfect working order as KIA cars are of course. It is the best car I have ever owned from a reliability point of view and during its 7 year warranty only needed anew brake light switch. Fixed for free of course. VED £30 so keep it chap.
So no new ,or secondhand, cars for us.

Boatshedmike    on 17 June 2019

Some very interesting and relevant comments. I often look at replacing my Laguna Sport Tourer with some more modern, my dilemma is what do I replace it with? It’s a 2 litre turbo petrol, automatic with 54000 miles on the clock, as an 08 registered car it’s value is very little. The car has been 100% reliable, well serviced and has had 2 cambelt changes during my ownership. My feelings are to run it for another few years and save my money! My other car is a Jaguar X type 2.5 auto awd, just completed 68000 miles, metallic green with cream leather, just sailed through its mot and drives like new, again little value but fun to drive and reliable. I guess what I’m saying is there’s some great value in keeping older cars .

Mike in Staffordshire

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