There are several factors leading to the current buyer’s market in cars:
- Low-interest rates – lowered to 1.5% and tipped to fall to as little as 0.5% in the second quarter with some suggesting 0% is not inconceivable
- Cashback offers from several manufacturers
- Three- and four-year 0% finance deals from many manufacturers, including Citroen which has also revived its no VAT deal on selected models
- Competitive Personal Contract Purchase deals, including zero deposits
- VAT reduced this year from 17.5% to 15%
- Two for one offers from dealers, including Central Garage on the Isle of Wight (buy Citroen C4 Picasso, get C1 free), Broadspeed in Essex (two for one on Dodge Avenger and Kia Magentis) and EMG Mazda in Norfolk (buy CX-7, get Mazda2 free)
- The raft of new low emission, high fuel-efficient models such as VW Blue Motion, Ford Ecotec, Mercedes BlueEfficiency and Peugeot Blue Lion will also save motorists money on running costs
However, It is expected that later this year manufacturers will put up their prices. So dealers are offering incredible deals to encourage customers to buy now. Vauxhall, Chevrolet, and BMW retail group Peter Vardy in Scotland are offering discount savings on local radio. It is also attracting customers with free servicing, nothing to pay until Easter, cashback, and 0% finance deals. “The deals on new and used cars are as good as they are going to get,” said group chief executive Peter Vardy. “Manufacturers have lots of cars to sell and their offers are very strong.”
The incredible offers are not expected to be around for long, however. As well as manufacturer price rises, many analysts expect taxes to rise in 2010 and a new VAT rate of 20% has been suggested.
Used cars, better value than ever…
For used cars, the massive drop in residual values at the tail end of summer means prices are now much lower than a year ago. Figures obtained by AM Magazine from residuals pricing guide CAP reveal that the average used value for a three year/30,000 mile lower medium car has fallen by 20% from December 2007 to December 2008. Upper medium cars, executive cars, MPVs, convertibles, and supercars also exceeded a 20% drop while 4x4s fell by nearly 30%.
However, industry sources claim that used values across all sectors, while significantly lower than a year ago, have started to stabilize. In December they actually edged up slightly on the previous month.