AFTER another buoyant year for car sales, what is in store for the new and used car market in 2003?

Glass’s Information Services says the sales boom that has characterised the new car market is likely to run out of steam during the early part of the year.

Adrian Rushmore, managing editor at Glass’s Information Services, said: “As consumers become more concerned about their disposable income, they can be expected to curb their expenditure on new cars. This is particularly true of the lower income groups that fuelled a significant amount of the growth in the small car sector over the past two years.

“A number of predictable economic factors will make many individuals more circumspect about their spending. For example, there is the increase in National Insurance contributions effective from April. In addition, consumers will gradually awaken to the fact that their pension provision is inadequate.

“The likelihood is of a positive start to the new car market in 2003, but we expect sales to become more restrained by mid-year.’’

The list prices of new cars rose by two per cent during 2002, but Glass’s suggests that this did not reflect the real situation in dealerships.

“There was a slight reduction in transaction prices, reinforced by a very high number of tactical consumer campaigns offering discounts, free insurance and low cost finance,” said Rushmore.

Used car sales showed growth of around five per cent in 2002, but Glass’s believes the second-hand market will struggle to maintain this momentum in 2003.

“On the face of it, two record-breaking years of new car sales could have dangerous ramifications for the supply of used cars, with unwanted models flooding the market and hitting values. However, given that something like 60 per cent of cars bought each year remain with their first owners for between 37 and 48 months, most of the new cars sold in 2002 will not arrive on used forecourts until next year and beyond.’’