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Disposal prices buck economic downturn

Date: 05 October 2007   |   Author: Rupert Saunders

A strong performance at auction by ex-fleet and lease cars during last year helped lift the value of the used car market in the UK to a record £33.9bn in 2006. That's a rise of £1.6bn on 2005 and a substantial £6.6bn more than at the start of the decade.

Average auction selling prices of a typical ex-business car (three years and 60,000 miles old) rose from £6254 at the start of 2006 to end the year at £6565, according to the BCA Used Car Report 2007. The most significant growth came in the first quarter of 2006 when average auction values rode by more than £250 a unit but, despite the economic uncertainty, values have continued to rise in 2007.

The volume of ex-business cars entering the market continues to drive the used car industry in the UK, which now accounts for 7.44 million sales a year - more than three times the size of the new car market. Of these used cars, just over four million were bought from used car dealers, a further 2.8 million were private to private sales and 400,000 were acquired from other routes, such as company sales to employees.

The report, published for the 17th consecutive year, suggests fleets and business car owners dispose of at least 1.25 million used cars each year. While some fleet and business used cars are sold to employees or privately, the vast majority of them find their way into franchised or non-franchised dealers' stock - around a quarter of dealers' annual used car volumes.

Tony Gannon, a BCA director, said: "Cars in this sector are highly desirable for professional buyers at auction. They are one-owner cars that will have generally been maintained to the highest standards and are increasingly offered for sale in ready-to-retail condition.

"With an increasingly wide range of cars being sold by fleets and leasing companies, it means there is a huge choice as well."

Sales of used cars from dealers in the typical ex-business sector (three- to five-year-old cars) increased 9% in 2006. This means dealers now take 77.3% of sales in this sector.

Rupert Saunders