As cars and wallets improve, our car-buying habits are changing. Michael McAleer reports
Unless you're 17 years old or a cyclist who has seen the error of your ways, the excitement of buying a new car - or even a used one - is tempered by the fact that you must also shift your own metal.
For used car buyers, the majority of motorists, price fluctuations are a mixed blessings. With strong new car sales so far this year, there are lots of used cars on forecourts and in the classified columns. The result has been a 2 per cent fall in the values of three-year-old models in the second quarter of the year, and a 1 to 1.5 per cent fall in five-year-old models.
"The used car market has been very strong with many low mileage cars coming back to the market in first-class condition with full service history," says Eoin Lynam, marketing director at GE Money. "Better build quality, extended warranties and more rigorous NCT have ensured that the quality of used cars gets better with each passing year."
There is growing evidence, he says, that the average car is only a third of the way through it useful life at five years, even though it has already lost 68 per cent of its value.
Industry sources suggest that cars are being replaced more frequently these days. Average new car buyers seem prepared to trade up after 24 to 30 months, taking a significant hit in depreciation.
City drivers traditionally saw 30,000 miles as time for a change, but these days the figure is more like 20,000.
The market buzz right now is all about 2006, when money from Special Savings Incentive Accounts (SSIA) is expected to push new car sales towards 200,000 for the year. Goodbody stockbrokers see €1 billion of the savings going on cars.
There's little agreement on how the money will break down, but many expect people to upgrade rather than simply replace. That will mean more interest in the used compact executive market, for models such as the Mercedes C-Class, BMW 3-Series or Lexus IS. But it will also lead to increasing interest in the small family sector, for models such as the Ford Focus and Toyota Corolla.
Dealers say the most noticeable shift in the past five years has been towards higher specification models and bigger engines. Drivers used to shy away from family saloons with anything over the standard 1.6-litre engine. Now, however, buyers are more content to take these cars with 1.8-litre or even 2-litre engines - the extra power roughly means a weekly surcharge of €10 for petrol and €5 for insurance.
Traditionally, Irish cars were bereft of anything that could be seen as a luxury accessory. This was partly for tax purposes - VRT is applied to a car's selling price, adding up to 32 per cent on each and every extra.
However, there was also a desire for the bigger model, with motorists sacrificing leather and air-con, even bigger engines so they could drive the executive car instead of the fleet fare.
Today Irish buyers are better able to shop around. They now demand extras and bigger engines. One industry source says: "Consumers are turning their noses up at base models without CD-player, sunroof, air-con or metallic paint. Extras are no longer personal choices with little long-term value. They're now worth two to three times the value they had in the 'old' days."
So, those wishing to trade in basic entry-level cars may find themselves getting what one dealer described as "a frosty reception".
Knowing the current market for your car - by checking what similar models are getting in the classifieds - is important, but you should also be aware of the used car stock of the dealer with whom you are seeking a trade-in. If, for example, the dealer has three used Rover 45s in stock, you'll find sales staff running for cover when you pull up in your pristine 45 looking for a trade-in. Some dealers will go so far as to brief sales staff on used cars they don't want.
Various brands still hold well, including the Toyota range, with buyers here more interested in strong reliability. Fiat has greatly reduced the number of hire-car registrations of late, but there remain substantial numbers of low-mileage registered cars on the forecourts.
Owners of Alfa Romeo 156s may be keen to part with their cars in time for the 159's arrival. The 156 has suffered poor residuals to date, say dealers, and the imminent arrival of its replacement will do nothing to help.
Finally, for those with cars over five years, prices in the volume sectors, particularly the €3,000-€6,000 bracket, are very stable. In the seven-to-eight year bracket, there is virtually no downward movement.
Ideally look for a full history and up to two-years NCT and all you'll pay are running costs. Such cars used to be hard to trade on, but many people, particularly those without credit history are now buying for cash.