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Sales of used cars in Britain fell by 3% during quarter three of 2007, but younger cars suffered the most, according to the latest analysis of DVLA data from Experian. This is the biggest drop in used car sales during quarter three the market has seen for eight years, and sales of cars under three years old suffered the highest loss, of 8% y/y.  

Kirk Fletcher, Managing Director of Experian’s Automotive division, said: “By the time the third quarter had begun, the base rate had already risen five times to 5.75% – its highest level since spring 2001 – so consumers were feeling the squeeze on their finances. Sales of ‘big ticket’ items, such as cars, were the most likely to suffer, and they did. The third quarter of 2007 saw the biggest drop in sales for the year so far.

“The picture in the new car market, however, was different. Although interest rate rises had affected the new car market too, by the end of the quarter, sales had increased. New cars are relatively cheaper than they used to be, but customer feedback to our dealer clients has been about the strong incentives offered alongside the new cars. New cars sales have therefore seen an upward trend.

“Those consumers that tended to go for nearly new or younger cars were seeing the benefits of getting a new car instead.”

Last year was also the first in which sales of older cars (three-six and six-nine years old) fell during quarter three, when previously, these were the only cars to see slight volume increases. However, the fall in sales was not as severe as the one suffered by cars less than three years old.

Mr. Fletcher said: “Only a few years ago, we were seeing younger cars, in particular those classed as nearly new, leap in sales each year; now they are among those seeing the biggest downturn in sales. Increased warranty cover, free insurance and 0 per cent finance deals on new cars are influencing the decision to buy a new car over a nearly new one. The gap is closing and nearly new cars no longer hold the appeal they once did.”

Used SUVs and MPVs remained popular (up 8% and 3% respectively) while all other segments saw a downturn.

Reviewing all the segments, Experian found that the biggest drop came from the upper medium segment (down 9%) followed by the executive segment (down 6%).

The sports segment, which had continued to increase in sales during the third quarter year on year, saw sales fall for the first time (down 2%).

Superminis saw the smallest fall in sales down (0.9%), but continued to be the most popular used car segment in the UK.

Mr. Fletcher concluded: “By the end of September in 2006, just over 6 million used cars were sold and by the end of that year just under 7.8 million used cars were sold. By the end of September 2007, the industry was 3% behind target. In order for the used car sector to avoid recording a loss during 2007 as a whole, October, November and December will need to record just under 1.9 million used car sales.”