While the new car market is on a downward sales trend, dealers are enjoying some consolation with a buoyant used car sales performance. Prices for used cars are showing something of a comeback in the dealers' favour, after some years of being kept low by the unusually high demand for new cars. Brian Byrne reports.
"Even people who traditionally never bought new were ignoring the two- and three-year-old cars they normally went for," a major Nissan dealer told Motors this week. "But over the past few months, I see them back to favouring their usual second-hand models, which have already taken their biggest depreciation hit. I see it as a return to common sense."
A Mazda dealer in the midlands reporting a "real buzz" over the past three or four months. He suggested one of the reasons was that buyers had finally "cottoned on to the real value of the euro" and were now questioning the money they were outlaying on new cars.
According to a Citroën dealer in Co Kildare: "Because of the high demand for new cars over the past few years, the resulting glut of used cars meant that the price we offered on even a two-year-old trade-in was lower than they expected. We didn't have a demand for the trade-ins, so we couldn't afford to bring any into stock at high prices."
And several car salesmen tell similar tales of buyers spending much more to change cars than they would have considered in similar financial terms in the late 1990s. This attitude was underpinned largely by cuts in the costs of loans as interest rates declined dramatically.
But now that's changing. Some believe that growing anxiety about the economy has tempered people's expectations, while resentment at the penal VRT rates in Ireland may also be taking hold.
Tightened dealer margins on new cars in the new Block Exemption environment may also be leaving salesmen with less to "play" with.
Used prices are said to be still a little on the soft side, so there are bargains out there for the second-hand buyer, particularly in 01/02 models. But many dealers expect prices to firm up further as stocks of used cars are depleted and new car sales decline.
Dealers are also reporting a return of interest in cheaper used cars, especially from younger people with €2,000 to €3,000 to spend after making provision for crippling insurance rates.
New car sales are down 6.5 per cent at 111,947 units for the first half of the year against the same period in 2002. Estimates at the beginning of the year of a 155,000-unit sales out-turn are now being revised downwards in the industry, with suggestions that it might go as low as 143,000.
Which is still not bad, as an annual 11 per cent replacement of the national car park would be very healthy indeed. As one dealer put it: "There's a living for most of us in that."