The economic downturn has not only affected monetary values it has also distorted many markets - one in particular being the used car market.
The Government Scrappage Scheme has certainly kick started the car industry in terms of new car sales but that has had an adverse effect upon the used car market for a number of reasons, with many brands effected - some more so than others.
For example, in the UK there is currently a shortage of used Honda vehicles, largely due to the fact that the Japanese manufacturers had to close their plant in Swindon for four months in order to safeguard as many jobs as they could. But how would that effect the supply of used Honda's I hear you cry?
Well, as less and less people were buying new cars that obviously meant that less people were part exchanging their existing cars - in this case, their used Honda's.
And if people were buying new cars, by and large it would have been in conjunction with the Government Scrappage Scheme, which again eats into the supply of used vehicles. In fact there is such a shortage in supply of certain used models that they are actually increasing in value and
being sold for well above their book price. Such distortion in markets can't be good for the economy - it certainly isn't good for many car dealers.
And it isn't as if we're talking vintage classics here, the used Hondas that are in short supply include the FR-V and the CR-V which are family cars. Such strange market conditions could be costly for many car dealers and may take some time for the market to get back to normal in terms of valuations.
The winner here though is moste certainly the consumer as brand new cars, complete with extended warranties, have become comparatively cheaper than five years ago - or even just a couple of years ago - and with such incentives as the Government Scrappage Scheme it's no wonder that people are opting for new as opposed to old.
This is not just a UK problem either - the success of a similar Government backed scrappage scheme and tax relief in Japan has left a shortage of used Honda vehicles on the market.
The Government Scrappage Scheme has been lauded a success - and a success it may well be for the motor trade, but certainly not for the used motor trade.
Author Resource:-
Thomas Pretty is a market analyst with many years of experience in the car sales industry. Find out more about used Honda at http://www.hondainchcape.co.uk/
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