Could deposits ignite used-car sales?
Motor manufacturers are introducing deposits on some nearly-new cars to keep their monthly payments lower than those now available on subsidised brand new vehicles.
Glass’s, the motor industry data market leader, said that the move had been made after some manufacturers said it was difficult making used car Personal Contract Purchases (PCP) price competitive.
Rupert Pontin, Glass’s head of valuations, said, ‘Franchise dealers were finding themselves in a position where the monthly PCP rate on a 12-month old car was only a few pounds less than a new one. This made the used stock tricky to move using this crucial finance method.
‘This situation has arisen for a number of reasons. One is that manufacturers remain very keen to keep plants working at near capacity, so they are offering more and more attractive finance deals on new vehicles. In 2016, new car PCP rates are probably lower than ever.
‘Another is that there are so many pre-registered vehicles now in the market, perhaps at a level twice that of roughly 12 months ago. This means there are large numbers of nearly-new cars on forecourts and dealers have to find ways to sell them. PCPs are an obvious route but they need to be price competitive.
‘Finance will be more crucial than ever in this year’s new and used car markets, we believe, so creating a sensible and sustainable pricing structure for PCPs across vehicles of different ages is crucial.’