Cars have never been this cheap, runs the advert. For once, it's true. If you feel you will need a new car in the next few months, or simply fancy upgrading to something a bit more swish, now's the time to act - for two reasons.
First, car prices have been falling like a stone in recent months. They really are the lowest they've ever been in real terms. In some cases, cars are being offered for sale at half price.
Second, prices appear to have just hit bottom - and could be about to rise again. Despite numerous reports that new vehicle sales are at their lowest level since the Romans introduced chariots to Britain, manufacturers have reacted to the fact that they can't shift their fields of unsold cars by upping prices.
Two weeks ago, both Ford and Vauxhall said they were increasing their list prices by 4.7% and 5% respectively. They blamed the decline of the pound against the euro for the increase. Audi also increased its prices recently.
And, after months of decline, reports from the auction halls suggest that used car prices have risen by £300 since December as buyers started coming back into the used market.
It all adds up to one thing: if you have a bit of money stashed away and you do need a new car, prepare to become one of the few winners of the credit crisis.
New cars at half price
One internet car broker this week was putting together what will be a UK first - a three-cars-for-the-price-of-one deal. Simon Empson, managing director of the Essex-based car broker Broadspeed.com, made headlines last year after offering two Kia Magentis models on a "bogof" (buy-one, get-one-free) deal and says he is now hoping to go one better. "Buyers of certain cars have never had it so good, and we have plenty of new or nearly new cars on our books that are now half price," he says. "Cars aren't half price across the board, but you should be able to get 30% to 40% off almost everything in the mainstream."
Empson says that manufacturers, desperate not to kill the used value of their models, have increasingly been pre-registering the cars and then offering them in an "as-new" condition with just a few miles on the clock. They have also cut lease costs as a way of disguising the price paid by the buyer. It's now possible, for example, to lease a Mercedes saloon for the same monthly payment as a Ford Mondeo.
The savings can be eye-watering. Broadspeed currently has new Chrysler 300C luxury saloons for £17,995, while the list price is close to £35,000. Those looking for a more environmentally friendly car should look at the broker's Kia Cee'ds. These have a list price at close to £14,000, but Empson is selling models that are a few months old, with 2,000 miles on the clock, at under £8,000. These cars have a 1.6 diesel engine that will average more than 60mpg, and they come with an unrivalled seven-year warranty.
A new Fiat Panda 1.1 Active, list price £7,095, is for sale at £5,141. Empson has also just delivered a new petrol Ford Mondeo that sold for almost £14,800. This car, which is very popular at the moment, lists at around £24,000.
Richard Headland, editor of Which Car?, agrees that this is a phenomenal time to buy a car. "If you have the cash and your job is safe, there are some stonking bargains out there - particularly for new cars. We recently found Fiat Pandas being sold new for less than one-year-old models at dealers. Consumers are probably getting some of the best-ever deals, if they are prepared to spend a bit of time finding them. Car makers have said that prices are set to rise, although it remains to be seen whether this will actually feed through. You may find the list prices go up, but the discounts just get even bigger."
Used cars
Used cars are also offering previously unseen value for money, especially among bigger models. If you bought a new Vauxhall Vectra estate in the past year, you may want to look away now because these have collapsed in value. This week, the Slough-based car supermarket TradeSales.co.uk is offering a nine-month-old 1.8 model, with 18,000 miles on the clock, for less than £6,000. Yet these cars were selling for around £15,000 just nine months ago.
Darren Miller, of the west London super-site Cargiant.co.uk, which specialises in selling three-year-old ex-fleet cars, says there have been some spectacular bargains in their halls, particularly for bigger-engined cars.
"Smaller cars have been holding their value much better, but last year's big petrol price hike knocked the 4x4 sector for six," he says. "Grand Cherokee Jeeps that were selling for £10,000 last March, have been going for £4,999. High-mileage, three-year-old, Mercedes-Benz C180 saloons can now be bought for less than £6,000.
The Cargiant website features a three-year-old Mercedes-Benz 4x4 ML350 that would have cost around £34,000 new. It has done just 20,000 miles and is now selling at £9,499. The fact that it averages 20mpg gives a clue why it has dropped some £25,000 in three years. Wait a few months, and it will probably drop even more.
Meanwhile Tony Gannon, a director a British Car Auctions, says used car values may finally have stopped falling. "What we are seeing now is an improvement in values from a low base. This suggests motorists are now more confident to buy used cars. After all, they remain exceptional value."
Is financial help on its way?
Cars may be cheap, but the problem for potential buyers is that it has become virtually impossible to obtain finance. Simon Empson of Broadspeed says buyers who previously never had a problem meeting lenders' criteria now find themselves turned down.
There might be help on the way from the government, which is considering various schemes to assist the ailing car market. There have been rumours of a VAT-free holiday, or £2,000 grants for those willing to scrap their old banger and replace it with a new low-emissions car. However, as many car discounts have now already gone below the 15% VAT level - Citroën is already offering VAT-free deals - it probably wouldn't make much difference to the real prices paid.
Such a move would, of course, help anyone daft enough to go into the local dealer and pay the price shown in the window without asking whether a better discount is available elsewhere.
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Feb 21, 2012
Car prices: No need to drive a hard bargain in the showroom
Richard Headland, editor, Which? Car, says: "The internet is revolutionising the way people are shopping for cars, and we're all for it. Not only can buyers find bargain prices online, they have better legal rights. The web has thrown down the gauntlet to traditional car dealerships."
He says that on top of big discounts, car buyers going online get the benefit of distance-selling regulations. These apply if you complete your deal on the internet rather than in person, and give buyers a seven-day cooling-off period in which you can reject the car and get a complete refund. If a deal is done in a showroom, you have no chance to change your mind.
Richard Sanders, founder of Drive the Deal (drivethedeal.com), claims to have sold the first new car on the internet in 1998.
Since then, he says, there has been a 35% increase in people buying online year on year. "I saw building a website as a way of quoting large numbers of people at minimal cost, so that I could pass on to the consumer as much of the saving as possible. People like being able to get a quote without pressure to buy. Contrast this with going to a showroom – if the buyer doesn't know what discount to ask for, they may not get a good deal."
Brokers such as Drive the Deal have been joined online in recent years by independent and franchised dealers, and even reverse auction sites where traders bid for the chance to sell the consumer the car they want.
Drive the Deal and Broadspeed.com buy large numbers of cars from dealers, then pass on the bulk discount they negotiate to individuals. The car is supplied by a dealer with full UK warranty and is exactly the same as you would have got from your local dealership. Which? Car says only 5% of the consumer group's members bought their last car online, but 18% said they are likely to do so in future.
Simon Empson, managing director at Broadspeed, which has been selling cars via the web since 1996, says business has never been better.
"Buyers have now become used to buying cars online from trusted companies. We now have some customers who have bought three or four cars from us and say they would never go back to trailing around the dealers. The only problem we have is getting cars quickly enough.
"In the face of the recession manufacturers slashed production for the UK market, but demand has remained strong and the industry is struggling to get cars. The discounts are still there but now most bookings we are taking are factory orders."
He suggests that when "block exemption" rules on who can sell new cars are ended in March by the European Commission, it could have a big impact on prices .
"We'll be able to order new cars for customers direct from the factory," Empson says. "We've successfully trialled working directly with five manufacturers over the last 12 months, and estimate this buying method could knock 25% off a car's asking price."
He says that on top of big discounts, car buyers going online get the benefit of distance-selling regulations. These apply if you complete your deal on the internet rather than in person, and give buyers a seven-day cooling-off period in which you can reject the car and get a complete refund. If a deal is done in a showroom, you have no chance to change your mind.
Richard Sanders, founder of Drive the Deal (drivethedeal.com), claims to have sold the first new car on the internet in 1998.
Since then, he says, there has been a 35% increase in people buying online year on year. "I saw building a website as a way of quoting large numbers of people at minimal cost, so that I could pass on to the consumer as much of the saving as possible. People like being able to get a quote without pressure to buy. Contrast this with going to a showroom – if the buyer doesn't know what discount to ask for, they may not get a good deal."
Brokers such as Drive the Deal have been joined online in recent years by independent and franchised dealers, and even reverse auction sites where traders bid for the chance to sell the consumer the car they want.
Drive the Deal and Broadspeed.com buy large numbers of cars from dealers, then pass on the bulk discount they negotiate to individuals. The car is supplied by a dealer with full UK warranty and is exactly the same as you would have got from your local dealership. Which? Car says only 5% of the consumer group's members bought their last car online, but 18% said they are likely to do so in future.
Simon Empson, managing director at Broadspeed, which has been selling cars via the web since 1996, says business has never been better.
"Buyers have now become used to buying cars online from trusted companies. We now have some customers who have bought three or four cars from us and say they would never go back to trailing around the dealers. The only problem we have is getting cars quickly enough.
"In the face of the recession manufacturers slashed production for the UK market, but demand has remained strong and the industry is struggling to get cars. The discounts are still there but now most bookings we are taking are factory orders."
He suggests that when "block exemption" rules on who can sell new cars are ended in March by the European Commission, it could have a big impact on prices .
"We'll be able to order new cars for customers direct from the factory," Empson says. "We've successfully trialled working directly with five manufacturers over the last 12 months, and estimate this buying method could knock 25% off a car's asking price."
Buying a used car
Simple saver
According to Glass's Guide - the motor trade bible - one-year-old cars typically retail for around 60% of their original cost. Buy a one-year-old Nissan Micra and you'll probably save around £4,500 on the original list price. The average new Ford Mondeo buyer is losing at least £5,000 in the first year of ownership - even after initial discounts are taken into account. The first owner's loss can be your gain - but the advantage of buying a one-year-old rather than a three-year-old car is you still have the bulk of the manufacturer's warranty in the event of mechanical problems.
Advanced saving tips
1. Head for a motoring "supersite"
If you know little or nothing about cars, the easiest way to buy second-hand (for cars three years old and over) is to head to one of the car supersites - cargiant.co.uk (based on a 23-acre site in west London) probably has the biggest stock and, rather crucially, it's cheap too. Here you can stroll around and take your pick of literally thousands of cars, open them up and sit in them. There are no pushy salesmen, as prices are fixed. It's a great place to compare rival models - you can stay all day until you have made a decision. Many of the biggest bargains come with high mileages, but this should not put you off; just ensure the service history is complete. The main advantage of buying in this way is you have some consumer protection if the car fails soon after. When you get home, ask a mechanic to look it over - any major faults and back you go.
2. Employ a professional to buy at auction
Car auctions are not for the faint-hearted, and unless you have a strong knowledge of both cars and auctions, are probably best avoided. However, the prices at the moment are very attractive - one solution is to use a professional auction buyer to bid on your behalf. Joe Dowd, who trades as auctioncarbuyer.co.uk, is the best known - simply tell him what you want and he'll do the rest. And because he pays trade commission, it won't cost you much more than if you had bought it yourself.
3. Buy privately, with care
Again, it helps here if you know what you are doing - "caveat emptor" (buyer beware) is very much the order of the day. If you've never bought a car privately before, get some assistance. Autotrader.co.uk is easily the main listing site to find used cars, although local papers can still be a good source, and eBay is trying to develop a market in used cars too. The main advice is to go with your instincts - if something seems too good to be true, it probably is.
Check the car's condition closely, look at the old MOTs, go though the service bills properly. Ask lots of questions - such as about the tax - and check the tyres. If you have any doubts, walk away. The great thing about used cars sales is that there are always plenty more to choose from. For more detailed buying advice, go to honestjohn.co.uk.
4. Get the car properly checked before you buy
If you'd like to get a mechanic to look at your chosen car, consider paying for a proper check. The AA will examine your prospective purchase from £122 for a basic check or £165 for something more serious, if you are a member (for non-members it's £136 and £184 respectively). Such inspections usually come with a sort of warranty for a month afterwards, although these can be difficult to claim on. Usedcarchecks.com is another inspection service.
5. And finally ...
Never buy an unknown used car without conducting an HPI ("hire purchase information") check. These cost from £4 (mycarcheck.com) to £20 (hpicheck.com) and will tell you if the car is subject to outstanding finance, has been stolen or involved in a serious accident. This is a must, however plausible the seller sounds.
Quick stats
32 million
Total number of cars on the UK roads today
£165
Cost of a full AA inspection of a used car
40%
Typical price of a three-year-old car as a proportion of its original (new) price
Planet saver
Running an old car is not as environmentally unfriendly as some would have you believe - if it is well serviced and running efficiently. Large amounts of energy are consumed in the car-building process, so buying a new car that emits less CO2 is not necessarily the best solution for those looking to cut down on their carbon emissions. Better to use an older car less than a new car more. Regular servicing and emissions checks are important, too - particularly if you run an older diesel. If you choose to maintain a diesel car, consider switching to bio-diesel produced from recycled chip fat.
According to Glass's Guide - the motor trade bible - one-year-old cars typically retail for around 60% of their original cost. Buy a one-year-old Nissan Micra and you'll probably save around £4,500 on the original list price. The average new Ford Mondeo buyer is losing at least £5,000 in the first year of ownership - even after initial discounts are taken into account. The first owner's loss can be your gain - but the advantage of buying a one-year-old rather than a three-year-old car is you still have the bulk of the manufacturer's warranty in the event of mechanical problems.
Advanced saving tips
1. Head for a motoring "supersite"
If you know little or nothing about cars, the easiest way to buy second-hand (for cars three years old and over) is to head to one of the car supersites - cargiant.co.uk (based on a 23-acre site in west London) probably has the biggest stock and, rather crucially, it's cheap too. Here you can stroll around and take your pick of literally thousands of cars, open them up and sit in them. There are no pushy salesmen, as prices are fixed. It's a great place to compare rival models - you can stay all day until you have made a decision. Many of the biggest bargains come with high mileages, but this should not put you off; just ensure the service history is complete. The main advantage of buying in this way is you have some consumer protection if the car fails soon after. When you get home, ask a mechanic to look it over - any major faults and back you go.
2. Employ a professional to buy at auction
Car auctions are not for the faint-hearted, and unless you have a strong knowledge of both cars and auctions, are probably best avoided. However, the prices at the moment are very attractive - one solution is to use a professional auction buyer to bid on your behalf. Joe Dowd, who trades as auctioncarbuyer.co.uk, is the best known - simply tell him what you want and he'll do the rest. And because he pays trade commission, it won't cost you much more than if you had bought it yourself.
3. Buy privately, with care
Again, it helps here if you know what you are doing - "caveat emptor" (buyer beware) is very much the order of the day. If you've never bought a car privately before, get some assistance. Autotrader.co.uk is easily the main listing site to find used cars, although local papers can still be a good source, and eBay is trying to develop a market in used cars too. The main advice is to go with your instincts - if something seems too good to be true, it probably is.
Check the car's condition closely, look at the old MOTs, go though the service bills properly. Ask lots of questions - such as about the tax - and check the tyres. If you have any doubts, walk away. The great thing about used cars sales is that there are always plenty more to choose from. For more detailed buying advice, go to honestjohn.co.uk.
4. Get the car properly checked before you buy
If you'd like to get a mechanic to look at your chosen car, consider paying for a proper check. The AA will examine your prospective purchase from £122 for a basic check or £165 for something more serious, if you are a member (for non-members it's £136 and £184 respectively). Such inspections usually come with a sort of warranty for a month afterwards, although these can be difficult to claim on. Usedcarchecks.com is another inspection service.
5. And finally ...
Never buy an unknown used car without conducting an HPI ("hire purchase information") check. These cost from £4 (mycarcheck.com) to £20 (hpicheck.com) and will tell you if the car is subject to outstanding finance, has been stolen or involved in a serious accident. This is a must, however plausible the seller sounds.
Quick stats
32 million
Total number of cars on the UK roads today
£165
Cost of a full AA inspection of a used car
40%
Typical price of a three-year-old car as a proportion of its original (new) price
Planet saver
Running an old car is not as environmentally unfriendly as some would have you believe - if it is well serviced and running efficiently. Large amounts of energy are consumed in the car-building process, so buying a new car that emits less CO2 is not necessarily the best solution for those looking to cut down on their carbon emissions. Better to use an older car less than a new car more. Regular servicing and emissions checks are important, too - particularly if you run an older diesel. If you choose to maintain a diesel car, consider switching to bio-diesel produced from recycled chip fat.
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