We’ve seen in the last 12 months the UK residual value market for used cars collapse and then start to improve with the credit crunch taking it’s toll on the UK Automotive industry. In 2010 in we should expect to still see this recovery, in fact it would be our prediction that we will see an all time high in terms of used car prices come middle of the year. Used stock is still difficult to find and there are various factors still impacting on this:

1.) Scrappage has taken out over 300000 used cars not all of which needed to be scrapped, whilst main dealers wouldn’t want to buy this kind of stock, smaller independents have been forced to change their stock profile and opt for higher ticket value cars.

2.) Daily Rental Supply, traditionally daily rental has supplied a large number of used cars into the sector, however, a combination of fewer cars being bought, longer retention periods and some business failures this has mean’t that used car and van supply has been delayed for up to 12 months yet. Typically, this sector has provided 6 month plus old cars as well.

3.) Dealers not generating used cars via demo programmes as a combination of less factory stock being built and squeezed credit lines.

All of this will take time to wash out in 2010 but supply will inevitably not meet demand and basic economics suggests price rises. Not unhealthy in itself but certainly an adjustment for everyone to consider.