Used car market to be turned upside down by financing deals – Telegraph.co.uk

11 months ago Comments Off on Used car market to be turned upside down by financing deals – Telegraph.co.uk

Pendragon owns car dealer brands including Stratstone

The industry does not keep official data on used car financing but Pendragon – which sells about 150,000 of the seven million second-hand cars traded annually in the UK – says it has seen the level of PCP purchases of used cars rise from almost zero five years to 28pc now in mass-market brands.

In the market for second hand luxury cars, where it is easier to determine a car’s value as it gets older, PCPs are more established, but the level of sales where they have been used has doubled to 55pc since 2011.

“This is a big opportunity, there is no conceivable reason why the level could not go as high as in new cars,” said Finn, adding PCPs’ fixed terms could encourage people to change cars more often, creating greater demand for new cars, which will be fed into the used market.

Buyers have the option of handing back the keys when a PCP’s term is up  Photo: Don Bayley

The chief executive sees eight years as the maximum viable age for buying a car with a PCP, because at that age repairs are likely to exceed the value of the car. This could also see cars being scrapped earlier than currently, again increasing demand in the new market.

PCPs are likely to spread according to James Baggott, managing director of Car Dealer magazine.

“They used to work only on premium cars because they held their value better but now finance companies are getting more adventurous,” he said, adding PCPs work best on cars up to five years old, because after that cars become harder to value.

Used car market to be turned upside down by financing deals – Telegraph.co.uk}