USED CAR prices, particularly those for bigger premium brands, have gone into freefall in recent months, according to several car dealers. Donal Byrnereports.
The problems facing many dealers means that some are now refusing to even quote for trade-ins, because they cannot sell what they have on their forecourts.
Many dealers privately admit the volume of second-hands is unsustainable. Dublin dealer Michael Barrable, who holds franchises for Fiat and Kia, said it was not uncommon for dealers to refuse to quote for trade-ins.
Another dealer, who did not want to be named, described the current market as a "bloodbath", while a colleague with a premium franchise said he was currently "taking €10,000 off the price of every second-hand" he is selling.
The latest figures from the Society of the Irish Motor Industry (SIMI) confirm a drop in the value of second-hand petrol cars at 15 per cent, and that of diesel cars at 11 per cent.
"The combination of new VRT rates, tax changes and the downturn in the economy have all combined to make this the worst year ever for the motor industry," says James McCormack of Western Motors in Galway, which sells high-end marques, such as Mercedes.
"If you look at the price of a Mercedes E320 CDi, it has dropped in price by €12,000 since July 1st, so I have to reduce the price of a second-hand considerably or just leave it on the forecourt. The problem is that people want the new lower prices for new cars, but they are not so willing to accept the fact that their trade-in has also dropped accordingly."
Some dealers are asking prices for used cars more appropriate for the market of six months ago. "They are dreaming, but that's all they're doing," says another dealer, who says he could not get €40,000 for a three-year-old Porsche Cayenne Turbo that originally cost €200,000.
A spokesman for Porsche in Ireland said the example was an extreme one. He said there was such a glut of cars that the trade itself was offering much lower prices when dealers tried to sell on cars that did not belong to their own franchise.
"In order to get that car up to Porsche requirements for re-sale, a dealer would have to spend quite a bit of money on it and in retail terms that car would still be worth in the region of €60,000 on the forecourt.
"I only recently sold an '06 Porsche Cayenne, which would have cost about €95,000 new, for €62,500. That is a very good re-sale value," said Ryan O'Connell of the Porsche Centre in Dublin.
Other dealers say business is tough, and customers have to be offered other incentives to buy. "We have loyalty programmes, cash incentives, up-front cash prices, lots of '06 and '07 stock and we take all trade-ins and offer warranties," said Joanne Cranley, marketing manager of Merlin Motor City in Dublin, which sells about 3,000 cars a year direct, and between 12,000 and 15,000 at auction.
"You have to be very proactive. I would say we have not dipped quite as low as the 20 per cent drop some are experiencing because of all these," she says.
Confirmation of the decline in second-hand prices comes as new figures - compiled for The Irish Times Motors supplement by Merrion Fleet Management - show how the value of cars after three years on the road has fallen since the introduction of the new emissions-based tax system in July.