Older Car Trends

A Fair Deal for Customers

Start Date: 1/9/2008

Glass is famous for its printed price Guides, but we also run a Consumer Values website at www.glass.co.uk. Consumers considering replacing their car use the site to value their existing vehicle for part exchange purposes, using a dataset derived from our printed valuation data. Site users often comment on their dealings with this motor trade, and we have recently received a substantial amount of feedback regarding very low part exchange offers for older cars.

One email came from the owner of a 1995 Vauxhall Frontera 2.4i Sport. Having paid £5,000 for the car three years ago, and kept it in excellent condition, he felt it was perhaps time to look at a slightly smaller vehicle. He took it to his local garage to get an idea of the cost to change against a 2001 Volkswagen Polo diesel, on the forecourt for £4,400. He was shocked when the seller offered £200 for his beloved Frontera, which had just been MOT’d, and had a recent set of tyres and an expensive new alternator. The owner then contacted us to ask whether this was indeed the true value of his car.

While it is true that prices for newer cars are quite depressed at present, good examples of any vehicle priced under £1,000 will usually find a home fairly quickly, even petrol 4x4s such as the Frontera in question. Recent eBay sales have seen similar vehicles in good condition sell for as much as £700 when presented correctly, so £200 was certainly less than many other traders would have bid for a saleable part exchange against a very profitable Polo.

The same can be said for franchised dealers selling nearly new cars. Another consumer recently contacted us to say that he had been offered just £50 for his (taxed and tested) 1983 Volkswagen Golf GTi against a 57-plate Golf diesel estate, retailing at £15,000. This seems ludicrous when one considers that the tax on the car was worth twice this amount, and that local scrapyards were offering £100 for the car without the tax, with another £50 on offer if the car was delivered to them.

To close the Golf deal, the dealer disregarded the part exchange, but went on to throw paint protection and free servicing into the pot, when a simple and very affordable over-allowance – perhaps in the low hundreds – would have sufficed, with no offence being caused to the customer. As things stand, there is a certain amount of regret being expressed by the buyer, who has not gone on to sing the dealer’s praises.

There is no doubt that all car retailers are finding things tough at the minute. But by the same token, there is no doubt that some sellers continue to make deals all the more difficult by failing to remember that their customers are only human, and often quite emotionally attached to the older cars they present as potential part exchanges. Telling customers that their prized possessions are not even worth scrap money is a major mistake, unless their business is not valued.

What makes these tales more unfathomable is that the dealers were not prepared to do anything to try and increase the offers for their customers’ vehicles. A few minutes spent on desk research via Autotrader or eBay, and a phone call to an older car buyer or a scrap merchant would have given useful information and strengthened the relationship with the customer. Small wonder then, that the overpriced Polo is still for sale, with a price tag some £400 lower than it was a few weeks ago, or that the Golf buyer’s circle of friends, each a potential customer, have all heard the story of how he sold his old car for £500, after a dealer offered him just £50.

Once again let us remind the dealer community that there are still people out there making good money from selling cars. They achieve this by doing their homework, and readily stretching themselves that extra little bit for their customers, in whatever area the customer suggests would lead to a deal. Successful sellers never fail to remember that a big part of the art of salesmanship is to ensure that the customer leaves not just with a new car, but with a smile on their face and a dealer sticker on the back window to serve as a recommendation to all their friends and family.

Referrals are the key to maintaining sales momentum in the midst of an economic downturn, but alienating buyers with derisory part exchange offers is a sure fire way of diminishing one’s future earnings. This winter is now certain to be one of the toughest trading periods the motor trade has experienced for many years, but when forecourt footfall has dwindled away, and the phones are no longer ringing, the dealers that couldn’t be bothered will only have themselves to blame.

Market Trend

There is no doubt that prices at the younger end of the car market are suffering, thanks to a gross imbalance in the level of supply versus demand. But, at the older end of the spectrum, there is much more in the way of good news, driven mainly by private buyers keen to cut their motoring costs.

It’s often said that when America sneezes, Britain catches a cold, partly as so many of our biggest companies are multinationals based in the US, but also because of the close cultural alignment between our two nations. The trend pendulum therefore swings in both directions, and there is one very positive trend sweeping the USA that may also be coming our way.

Rapidly rising fuel prices have led to a huge increase in the cost of living stateside. The average price of a gallon of petrol is now the highest ever when adjusted for inflation, and 60% of respondents in a recent Gallup poll for USA Today said that they were trimming much of their spending as a result. With 80% of those polled saying they doubted that high petrol prices were temporary, and total miles driven by Americans falling for the first time in thirty years, the USA’s relationship with the car is being radically overhauled.

Though oil prices are now coming down, the economy remains in the doldrums, and many car drivers are abandoning less fuel-efficient cars for smaller, more economical vehicles, even when older or less well equipped than their existing transport.

The Geo Metro was sold in the USA from 1989 to 1997. Though at the time it was derided widely for its small size and overall unattractiveness, it is one of the most economical cars ever sold in the USA, matching modern-day mpg standard bearers like the Toyota Prius. Thanks to its effectiveness in the crucial fuel economy arena, and despite its basic nature everywhere else, the Metro is now experiencing a substantial revival amongst budget conscious buyers looking to save money on their fuel bills.

This huge increase in interest for the Geo Metro has led to a sharp increase in prices for the cars across the USA. Kelly Blue Book, the US car price experts, report that prices have climbed almost 600%, from a low point of $1,100 a few short months ago to over $6,000 for the best examples today. The Metro is not alone, as cars like the Ford Festiva (Mazda 121) and Hyundai Excel (Pony) are also experiencing higher prices.

The difference between the UK and US car markets is that we have enjoyed the benefits of economical small cars for quite some time, but there is growing evidence that many fuel efficient older cars are now experiencing zero depreciation or even moderate appreciation, as owners of fuel inefficient older cars step sideways into smaller vehicles of the same age.

Increased mpg does not necessarily mean tiny car torture. My own VW Corrado 2.0 8v can match the mpg of the family Prius on a run, and averages over 43 mpg in mixed driving, which is nothing to be sniffed at. Other relatively stylish cars endowed with respectable fuel economy include the Seat Ibiza diesel, and the Peugeot 306 D Turbo, both of which continue to sell well.

Selling prices for relatively fuel-efficient older vehicles on eBay over the last few months have remained impressive, with Volkswagen Golf and Toyota Corolla being amongst the strongest. Good examples of ‘96-‘98 Golf CL TDi and Corolla SRs of a similar vintage will usually top our Private Sale prices when presented properly online.

Small older cars are still an easy sale in front of the right audience, with some selling in under an hour on eBay when priced right and displayed effectively. Prices for small and lower medium cars remain relatively stable, and even old hands like the Citroen ZX hatchback, with its conventional suspension and resistance to rust, will often sell for a good price, thanks to a reputation for excellent fuel economy on diesel models. Older diesels make sense, as their minimal price premium over equivalent petrols is soon recovered, despite the higher fuel costs.

Sales activity beyond these sectors is really dependent on the number of active buyers and what they are looking for. Older estates like the Volvo 940 are still sought after, but only when presented with dealer history and in the right colour and trim. Other prestige badges are increasingly less desirable with age, and Audi, BMW and Mercedes cars have all been pared back in price. The exception here is S-Class Mercedes, which represents a staggering amount of car for the money, and is not all that expensive on fuel if used sensibly. Build quality is amongst the best of any production car ever made, and the delight in owning a good example is a relief from the everyday doom and gloom, so prices for these cars are very stable. LPG is also still a great idea on big cars and can sometimes double the sale price.

Prices for all the so-called “toys” are more than a little inconsistent, again depending on the car and the buyer. Exceptions to the instability include classic hot hatches like the Golf GTi, and more desirable convertibles, many of which have now moved into the world of the collector, such as E-Class Mercedes and the best examples of early Saab 900 Convertible.

Amongst the off-roaders, many owners now acknowledge that their vehicles are worth more to them for the odd job here and there than they are in a quick sale at a silly price, so they are keeping them and adding a smaller, cheaper to run supermini, or perhaps even a scooter, to the family fleet. Cars registered before March 2001 pay standard road tax, with discounts for lower engine size, so there are economies to be made if one buys wisely and minimises standing costs such as road tax and insurance. Some owners are even holding off on taxing the 4x4 until it is needed for holidays and trips to see relatives for example. They do say every little helps.

There is no doubt that prices for younger cars are in the doldrums, but cheap older cars are not feeling the pinch quite so hard. When prices are as low as some of these cars are now, the only way is up. Strange as it may sound, for some older cars, this might have already started.

John Glynn
Car Editor
September 2008