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Money-savvy buyers shun new cars for cheaper second-hand alternatives

Published 04 July 2019

Drivers are turning their backs on factory-fresh new cars in favour of buying cheaper, second-hand alternatives.

Half-year results show a 3.4 per cent fall in registrations, with 44,000 fewer new cars being sold compared to 2018.

However, while the figures have been labelled as "worrying" by the Society of Motor Manufacturers and Traders, some market commentators are linking the data to a wholesale change in car buying habits within the UK.

>>> Best pre-reg and nearly new car deals

"The recent popularity of PCP loans has injected a large number of nearly new cars into the second hand market, encouraging some people to buy used instead of new," said James Fairclough, CEO of AA Cars.

"This shift has been good news for the used car market, which saw sales hold steady in the first quarter of the year, with a modest drop of 0.6 per cent."

This viewpoint has been echoed by The National Franchised Dealers Association (NFDA), which represents more than 4500 franchise car and commercial vehicle dealers in the UK.

The NFDA told HonestJohn.co.uk "there are some good opportunities for consumers on the market" and as uncertainty continues to have an effect on new car sales, used and nearly new cars, as well as aftersales, remain key areas of focus for dealers.

HJ VED Image 1

HonestJohn.co.uk’s research has found large discounts for pre-registered and nearly new cars. Pre-registered vehicles are effectively surplus stock, sold cheaply to dealers who then register them before selling them on as ‘ex-demo’ or ‘delivery mileage’ models.

Buyers can save almost £9000 on 2019 examples of the five-door BMW 1 Series 118i Sport (RRP £24,725), while nearly new versions of the Honda Jazz S 1.3 i-VTEC (RRP £14,600) are being advertised from as little as £10,990.

There are big savings on the latest Volkswagen Polo 1.0 TSI, with delivery mileage 2019 models starting from £11,790 (RRP £14,375) while petrol and diesel versions of the Skoda Karoq can be found for less than £19,000.

Share prices of Britain's biggest car dealer, Pendragon, fell by nearly a quarter in the spring, after it said it would make a significant loss in the first half of 2019.

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.

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

Comments

Mark Cadman    on 8 July 2019

I would imagine that the newly introduced VED tax brackets aren't helping much either, with some of the lower emission cars now having to pay around £145 per year from year 2. Interestingly, I compared a 1 litre Citroen C1 with a Ford Mustang 5 litre V8 and both were £145 from year 2 (hardly encouraging people to go for eco friendly cars). Granted there was a big difference in the year 1 tax of £130 vs £2135, but still. Going for a 3 year old C1 results in an annual VED of £0.

signman    on 8 July 2019

I have a March 2016 diesel with just £30 VED. The new equivalent is £145.

I decided to pay off the PCP and keep my car rather than realise the depreciation and be indebted for twice as much.

If I were a second hand car buyer I'd be really pleased to obtain my car for around £13k and effectively that is what I've done by paying the'.balloon'..

Not a great thing for the environment (although mine is Euro 6) and certainly the taxes I have saved have not benefited the Exchequer, but the current version of my model offers nothing new to pamper me with (in fact the new version deleted the cooling seats I enjoy) and I am sceptical about my future income in these troubled times.

Ian68    on 8 July 2019

That is exactly what I am doing! My "balloon payment" on a up to date Mercedes C-Class is £5800. 37K on the clock and maintained with Mercedes care plan. Will I buy another??? I use in the week 100 miles or so weekends use sparingly or bus/taxi.

I think the whole car buying system is in a mess!

Cloverleaf4    on 8 July 2019

I agree, Edmund King was the other day suggesting something which has been muted for many years. Road tax should perhaps be based on mileage rather than the car. OK there would have to be some rules in place to make it work, it's just applying common sense really. They do like to tax the motorist though under the guise of saving the planet. The authorities were quite happy though to allow 70 thousand UK footie fans to travel to Madrid and back to watch the recent CL final.

MartyF    on 8 July 2019

The bargains are out there.
I picked up a 2016 Ford Mondeo diesel estate just over a year ago for £11000 which must have been less than half price. Just 9000 miles covered and zero VED.
I couldn’t ask for more. Vehicle is fantastic and easily gives 60mpg on the motorway.
This was my first used car purchase and certainly won’t be my last

Classical    on 9 July 2019

Why the insatiable urge to trade in a low mileage perfectly useable car just to have the latest model with the latest gadgets and gizmos? Doesn't do much to help reduce global warming when the huge emissions caused by the manufacture of new cars are taken into account. We should all keep our cars for at least a couple of years longer!

Edited by Classical on 09/07/2019 at 10:51

signman    on 9 July 2019

It seems only private new car sales are holding up - probably because many are on the PCP bandwagon and it's easy to trade your 2 or 3 year old motor for a brand new one and carry on for just a few more quid each month - just like upgrading your phone. Similarly private leasing is increasingly popular.

That's all fine and dandy if you can assume in these difficult times your income/job is secure and you are happy to take on increasing burden of debt, but with the fast changing technologies making many ICE's worth less than planned (especially diesels) I decided to get off the PCP rollercoaster and sit tight with my Euro 6 50mpg diesel that also only sets me back £30 VED.

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