marylsommers: Used car prices fall as buyers downsize

Auto Trader says asking prices for used large family cars fell 23% year-on-year, as buyers become increasingly cautious

The average asking price for a used car in the UK was �9,206 in the second quarter of the year, down 1.3% on the same period in 2010 ? but a 6% drop after taking inflation into account, according to Auto Trader. It said the fall can be attributed to the recession putting a squeeze on household finances and high fuel prices.

The company, which claims to be the largest digital marketplace for vehicles with 80% of all available used cars for sale in the UK (and is part-owned by Guardian Media Group), said the average asking price for second-hand cars was at its highest in March 2011, at �9,400, but had dropped 3.7% by July to �9,054. Average prices in London fell the most in the UK year-on-year, plunging 5.9% from �10,247 to �9,644.

The index indicates there is an emerging trend in buyers looking to downsize to smaller, more fuel-efficient cars, as well as multi-car households moving back to single-car ownership. The average asking price for used large family cars such as the Peugeot 607 and Citroen C6 dropped by 22.7% year-on-year in the second quarter of 2011 from �4,928 to �3,809; the average asking price for used small cars remained "relatively resilient by comparison", the company said.

Among the top 10 most searched for vehicles on Auto Trader, only the Ford Fiesta showed an increase in the average asking price sought over the year. The nine remaining marques all recorded actual price reductions, with the average asking price for the most searched-for vehicle ? the BMW 3 series ? showing a 15.8% reduction in the second quarter of 2011 versus the same period in 2010.

It is not the case the further north buyers travel, the cheaper the price: the average asking price for a Ford Mondeo was �8,536 in Scotland against �5,755 in the south-west. But three regions in the Auto Trader Index saw average asking price increases in actual terms, including the east of England, Yorkshire and Scotland.

The company also said it is taking a week longer to buy a used car this year than it did in the second quarter of 2010, as buyers have become increasingly cautious.

Tim Peake, director of Auto Trader, said: "Market conditions are clearly making it tougher for dealers to reach closure on deals. The luxury end of the market has also been feeling some pressure. The average asking price for high performance coupes has suffered, though the resilience in asking prices for 4x4s and saloons suggests some buyers are switching away from brand new to nearly new.

"But it is not all bad news. This is currently a buyers' market. Good quality cars by some of the best manufacturers are now available at prices lower, and in some cases considerably lower, than a year or 18 months ago."

Mark King

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