Cars under three years old lose their appeal

News release

Contact:
Serj Heera
Press Relations Executive, Automotive & Insurance
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serjeet.heera@uk.experian.com Email

Cars under three years old lose their appeal

Nottingham, UK, 29 January 2008 - Sales of used cars fell by 3 per cent during quarter three of 2007, but younger cars suffered the most, according to the latest figures from Experian^®, the global information services company.  This is the biggest drop in used car sales during quarter three the industry has seen for eight years. 

Younger cars, aged less than three years old, suffered the highest loss, falling in sales by 8 per cent, compared to quarter three of 2006.  This is the biggest drop in sales for younger cars during quarter three since 2000.

Kirk Fletcher, Managing Director of Experian’s Automotive division, said: “By the time the third quarter had begun, the base rate had already risen five times to 5.75 per cent – its highest level since spring 2001 – so consumers were feeling the squeeze on their finances.  Sales of ‘big ticket’ items, such as cars, were the most likely to suffer, and they did.  The third quarter of 2007 saw the biggest drop in sales for the year so far. 

“The picture within the new car market, however, was different.  Although interest rate rises had affected the new car market too, by the end of the quarter, sales had increased.  New cars are relatively cheaper than they used to be, but customer feedback to our dealer clients has been about the strong incentives offered alongside the new cars.  New cars sales have therefore seen an upward trend.

“Those consumers that tended to go for nearly new or younger cars were seeing the benefits of getting a new car instead.”

Age
It was the first year that sales of older cars (aged three to six and six to nine years old) fell during quarter three, when previously, these cars were the only ones to see slight increases.  However, the fall in sales was not as severe as the one suffered by cars less than three years old. 

Kirk said: “Only a few years ago, we were seeing younger cars, in particular those classed as nearly new, leap in sales each year; now they are amongst those seeing the biggest downturn in sales. 

“Increased warranty cover, free insurance and 0 per cent finance deals on new cars are influencing the decision to buy a new car over a nearly new one.  The gap is closing and nearly new cars no longer hold the appeal they once did.”

Segments
SUVs and MPVs remained popular (up 8 per cent and 3 per cent) while all other segments saw a downturn. 

Looking specifically at SUVs, sales of this segment were strongest in the age groups one to three years old (up 12 per cent) and three to six years old (up 14 per cent).  However, sales of younger SUV models (under a year old), fell by 14 per cent. 

Similarly, MPVs aged up to a year old and one to three years old saw the biggest fall in sales (down 9 per cent and 23 per cent), but sales of older MPVs (over three years old) thrived during quarter three (up 13 per cent).

Reviewing all the segments, Experian found that the biggest drop came from the upper medium segment (down 9 per cent) followed by the executive segment (down 6 per cent).

The sports segment, which had continued to increase in sales during the third quarter year on year, saw sales fall for the first time (down 2 per cent).

Super minis saw the smallest fall in sales down (0.9 per cent), but continued to be the most popular selling segment in the UK.

Fuel
The number of diesel run cars sold during quarter three increased by 4 per cent while petrol run cars fell by 5 per cent.  In the last five years, sales of diesel cars have increased by around 51 per cent while sales of petrol run cars has fallen by around 13 per cent.

The only segment to not see an increase in the number of used diesel cars was the super mini (down 1 per cent).  The segment to see the biggest increase in diesel sales was the sports segment (up 342 per cent).  

Kirk said: “The only segments to see strong sales in both the petrol and diesel categories were SUVs and MPVs (up three per cent for each segment), proving that their popularity is still strong despite the negative media attention and concerns over the environment.

“In the last five years, the number of used SUVs sold has more than doubled and recent sales have shown no signs of slowing.  Sales of MPVs have increased by around 90 per cent in the last five years.  However, recent figures have indicated a slowdown.”

Kirk concluded: “Conditions are tough for used car dealers and the squeeze on consumers’ spending is not helping.  By the end of September in 2006, just over 6 million used cars were sold and by the end of that year just under 7.8 million used cars were sold.  By the end of September 2007, the industry was 3 per cent behind target.  In order for the used car sector to avoid recording a loss during 2007 as a whole, October, November and December will need to record just under 1.9 million used car sales.”

Source: Experian’s Business Strategies division and DVLA

Source: Experian’s Business Strategies division and DVLA

Source: Experian’s Business Strategies division and DVLA

ENDS
 

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About Experian’s Automotive division
Experian’s Automotive division offers intelligent solutions, which enable its customers to optimise the potential of the vehicle, the consumer and the market.  Working with organisations operating throughout the vehicle life cycle from manufacturers through to retailers, finance houses, insurers and aftermarket service providers, solutions are delivered through two business streams.  Automotive Data and Decisioning enables customers to interrogate in real-time the history, identity and risk associated with any given vehicle and Automotive Marketing Solutions helps the automotive market target, acquire and manage customer relationships more effectively and efficiently both on and offline.