Steady demand for used car parts in UK vehicle dismantling sector
The turmoil this month (Sep 08) in the US Financial markets, leading to further downward pressure on the UK economy and the UK Automotive industry in particular has played a part in strengthening the used car part sector.
The UK Motor industry has seen a sharp fall in the value of used vehicles this summer and autumn, and it is much more than in previous years. Some estimates of car depreciation put the drop as much as 25-30% of new and nearly new vehicles for this year alone.
Cars worst affected are the large 4 x 4s and the bigger family cars. In April 2009 the new VED (Vehicle Excise Duty) comes into effect, which aligns heavy fuel consumption to the Government’s new green taxes structure.
The slowdown in the car market has been caused by the Global Recession and the continuing fear of rising Interest rates and inflation. However the interesting factor here for us is the positive affect on the car parts sector as a whole, and the continuing demand for used car parts and parts location services (like CarSpareFinder), in particular.
People are holding off buying a new car, or replacing it. There is evidence of extending the ownership of car from new, from 3 years to 4 years or more. Linked b y cause and effect is an increasing demand for replacement car and van parts, and the consumer desire to extend the life, value and quality of car and light commercial lifetime ownership.
Is this upward trend in demand for used car parts a ‘flash in the pan’ or is it likely to remain for sometime?
It appears there are 2 main factors which are behind the present strong demand for car parts, unlike many other industries (retail, diy and home furnishings, financial service and holiday sectors) who have all seen a very sharp fall in business.
Firstly, people are being charged too much to borrow the money they need to fund their spending e.g. purchase of a new car. Secondly, vehicle depreciation, which can be many hundred of pounds sterling a month, has gone into ‘free fall’. It has surprised even the Automotive Industry experts just how fast it has happened, with larger cars with bigger engines being the worst affected.
What might be influencing the used car parts marketplace?
· 4 x 4 and Large family car owners may be reluctant to ‘write off’ the value of their cars if they trade it in. By hanging on to the car, their requirements for replacement parts increases (crash repairs, new bulbs, tyres, replacement engines and gearboxes etc.)
· When they need parts, they are much more inclined to accept a genuine recycled part (e.g. engine, gearbox, body panel) of a similar age and condition to their present car.
· Cheap counterfeit car parts from Eastern Europe and the Far East, has a counter effect on consumer demand for genuine used car parts from establish UK breakers and dismantlers.
· Less newer cars means that the demand for used cars is greater, which means that more garages and mobile mechanics are attracted to doing up cars and bringing them to market. This increases demand in the motor trade for used car parts.
· Demand for scrap metal in the UK is increasing due to the demand for metals from the growing Indian and Chinese industries, encouraging cars to be scrapped using services like scrap-car which is a free service offered by CarSpareFinder to the General Public and UK breakers and dismantlers.
