We are taking a break from the turmoil in equity markets to
consider a more parochial question – used car prices.
I have been pondering replacing our current, eight-year-old
Honda for something more recent. The search started with the aim of
tracking down a functional, bulletproof motor. But having
discovered how cheap second hand cars are I have been tempted by
more exotic, Jeremy Clarkson-friendly alternatives.
My feeling that used cars are cheap is not an illusion of
ageing, like believing policemen are getting younger. The official
data show that since 2000 the price of second hand cars has fallen
by 35%. Over the same period new car prices have risen 58%.
Taking into account the rise in personal disposable incomes, the
fall in prices is even more pronounced. Relative to rising incomes
used car prices have fallen by roughly 70% in the last 16
years.
