It was Disraeli who coined the aphorism ‘There are lies, damned lies, and statistics’. This was in an era when there was no such thing as focus groups, market research and computer-gathered databases. Disraeli certainly didn’t have to deal with the increasingly complex demographics of the motor industry.
Every day I am in receipt of a mountain of statistics, carefully disguised as press releases from the motor industry, all competing for my attention with the liberal use of flow charts, a smattering of diagrams and invariably a plethora of stats.
Of particular interest this week was the news that the value of three-year-old cars was strengthening. Deciphering the stats, it seems that there has been a firming up of residual values on three-year-old cars during the tail end of 2005. An average 2002 car, such as a ‘52’ plate with 36,000 miles, is now worth £6,624, dropping just £150 in the final quarter of 2005.
Superminis fared even better over the last quarter of 2005 with an average three-year-old supermini (2002 ‘52’ plate) reducing by just 2.6 per cent, or £100. The signs are that during January 2006 the average values are continuing to remain steady. But it is still a sobering thought to reflect on the fact that the Honda Jazz. which has the strongest residuals in the sector. still only retains 56 per cent of its original list price after three years. That’s virtually a half-price car.
Furthermore, our love affair with SUVs appears to waning. During the last quarter of 2005, three-year-old 2002 ‘52’-plate SUVs fell in average value by 3.8 per cent, £300 – more than the market average. It seems that the increase in the supply of used examples and a wider choice of models is starting to take its toll.
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But whilst some three-year-old cars are starting to hold their value better the picture on the nearly new stuff is very different, with virtually all models suffering very heavy depreciation.
The news that December’s new car sales were up on the previous year may have come as a shock to many but it was predictable really. With September, October and November all down on the previous year the car manufacturers had to off-load the stock somewhere and they all played the game of brinksmanship – hoping that the punters would return to the showrooms before the year ended. But this wasn’t to be and so the flood gates and discounts were opened in December. The big question is how many of those new car registrations were retail sales and how many were short-term registrations like demonstrators, rental cars and short term leasing deals?
All cars have to find a home eventually and doing deals for volume usually results in a large number of cars that return to the market as used cars pretty quickly. If I was in the market for a new or nearly new car I would be rubbing my hands with glee. The new plate in March will signal a quickening of pace among the dealers as they fight for sales and a fair number of late 2005 registered cars re-entering the market at three months old. The best place to buy at the moment looks like the nearly new end of the market and I think this will continue at least until late spring.