Car prices had been steadily declining over the past one or two years, despite the increase in the cost of steel and other raw materials. This is due to the sluggish demand for new cars, forcing the manufacturers to operate at very thin profit margins. Subsequently, the prices of used cars had seen a drastic fall. In the United Kingdom, a survey in June 2008 revealed that the price of cars that were between 1 and 3 years old had dropped by about 12% over a period of one year. The survey further showed that the prices of such used cars could dip by another 25% during the full year 2008.
In a car auction in Britain, a 2-year old Rolls Royce Phantom in perfect condition was auctioned for 135,000 British pounds, against its original price of 265,000 British pounds. The same fate awaited many used cars like a Range Rover, a Bentley Continental, and other models of Audi and BMW. The steep rise in oil and gas prices also contributed to people shunning away from gas guzzlers. In November 2008, the sales of new cars in luxury class slipped 39% from a year ago sales. Consequently, the prices of used cars also dipped in a corresponding manner, with people offering much less for them.
Even though this had impacted the used car market seriously, there is also a small silver lining in this price fall. The dipping prices had created a unique opportunity for huge bargains in the purchase of used cars. Most of the luxury models and a fair portion of the standard models are available at highly discounted prices. If you wish to buy a car that you had always wanted but felt you would not be able to afford, this is the time for it. You would be able to force the price down in at least one of the many used car auctions to purchase your dream car.
However, the opportunity to buy used cars at highly attractive prices could be utilized only if you wish to hold on to the car for a considerable period of time. If you wish to make quick money by buying it now and selling it a few months later, then you should just forget about it as a wrong notion. Even if you get the lowest possible price for the used car now, the amount that you get after a few months would definitely be lesser by about 2.5% to 10%. The used cars prices are declining and are going to continue to fall for some more time to come. This is not the time for fast buy and sell deals.
One of the reasons for the drop in used cars prices is the increasing default rate on many car loans. The financial institutions and other lenders are saddled with too many cars. They are prepared to dispose of these cars at whatever price they could get, instead of keeping them as dead stock. Hence, car auction by lenders is a place where you would be able to pick up used cars at bargain prices. Take advantage of the fall in used cars prices, if you wish to buy a good car and keep it for a few years.