August 24, 2008

With the current market weakness focussing increasing amounts of attention on poor vehicle condition, Manheim Auctions is stressing to dealers the impact on their profits of not fully appraising part-exchanges properly. Their advice is directed at dealers, who may be taking in cars of little resale value, but the warnings are as valuable for people looking to buy or sell a used car in the current climate. 

Their advice lists the sort of reductions in value that various deficiencies will have on a used car.  For example, broken windscreens devalue cars by between £100 to £300, cracked headlights at £75 to £150, whilst serious damage to alloy wheels could mean as much as £50 to £150 per wheel knocked off the value.  The bottom line is that if you're looking to sell you may find it worthwhile to make repairs to your car, in order to be able to charge a higher price (within reason).  More likely though, is that you'll be able to use these signs of wear as a haggling tool to pay less for your next car.

In addition to the listed faults poorly repaired accident damage is also a real turn-off, affecting the value as much as £250 per panel. Interior condition is just as crucial, with badly worn carpets and front seat upholstery both affecting values by between £100 and £350. Other items for which to watch out are missing Sat Nav discs and inoperative air conditioning/climate control, all good room for reductions.

With personal liquidity at it's lowest tide for decades those buyers that are still afloat can really make their money work for them, and have rich pickings among the cars that are out there.  Just looking at some of the new car offers out there shows how tough market conditions are.  With Citroen offering £5,500 cashback on their £15,495 1.6i Xsara Picasso, the residual values of used models cannot remain unaffected.  As a result buyers are demanding full service history, expired MOTs and a full set of receipts for any works on the car.  £200 - £500 can be wiped off the value of a car without service history, with an additional £150 - £200 for missing MOTs.

Mike Pilkington, Managing Director, Manheim Auctions & Remarketing said: “Apart from general consumer concerns over car running costs, the credit crunch is restricting the number of potential retail buyers in the market. This, coupled with the contraction of the sub-prime finance sector, is making trade buyers more conscious of preparation and stocking costs. Vehicles in poor condition are much harder to retail and there is not the appetite to take them into stock, unless the price reflects it. As the tough market continues I think that there is little prospect of trade buyers not coming down hard on damaged or missing items for the foreseeable future.”

The coming VED changes will also make many luxury cars extremely cheap on the used market so keep the VED bands and associated costs in mind when viewing cars.  If a car is going to cost you £500 a year to tax but as a result has lost £4,000 in value it would still be good value seven years later.  VED changes give you swings and roundabouts to play on, you just have to work out which best suits your game.

You don't have to be a ruthless hedge fund to make good in the current financial climate, you just need to be strict on the criteria for your next used car.  If it doesn't match your exact standards you've got a lot of bargaining room, or else there are sure to be better models available further down the page, keep an eye on ebay motors, you'll be surprised how many cars get re-listed... 

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