THE VALUES of 'nearly-new' cars are unlikely to be affected by the recently introduced scrappage scheme, according to EurotaxGlass's.
Amid fears that the prices for second hand cars less than one-year-old would have to drop to compete with reduced prices for new cars, the publisher of Glass’s Guide has said that it expects the scheme to have little effect on nearly-new prices because of the type of car buyers within the segment.
Adrian Rushmore, Managing Editor at Glass’s, said: “The majority of consumers already interested in purchasing a nearly-new car will not be existing owners of cars 10 years or older, and will therefore not be eligible for the scrappage bonus. For this reason demand will not switch from late-plate to new vehicles, harming late-plate values.
“Most of the vehicle manufacturers’ share of the £2,000 scrappage bonus is already on offer to potential car buyers in the form of sales discounts and incentives. The manufacturers’ scrappage bonus will largely replace these incentives, not supplement them, and today’s used car values already take full account of current low transaction prices on new cars.
The Chancellor introduced the new "cash for bangers" car-scrappage scheme in his 2009 Budget, following similar moves by some European nations.
Anyone with a car registered before December 31 1999 will get a cash incentive of £2,000 to trade in their old vehicle for a brand new one.
A total of £1,000 will come from the Government and the remaining £1,000 from car companies, with participants being able to buy any new vehicle, including small vans, rather than just low-pollution models.
According to Rushmore: “The scrappage scheme is likely to increase demand for new city cars and superminis more than any other type of car. Many of these cars are already in limited supply, and the expected additional demand will merely serve to extend delivery lead times. Customers not eligible for the scheme will also find themselves joining lengthening queues, and are therefore more likely to consider a late-used alternative. In addition, manufacturers may also seize the opportunity to increase list prices on those models in the highest demand. These factors will conspire to support – or possibly even promote – prices for the nearly-new small and lower-medium car.”
These factors all point to the scrappage scheme having very little impact on the used market over the coming months, concludes Rushmore. “While we expect values to ease back during the summer months – as they would during any typical year – we do not forecast any further increase in rates of depreciation as a result of the introduction of the scheme.”
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