Second Hand Car Sales Suffer In Recession

A vehicle is the second largest purchase that many families make. Most people cannot afford to make a payment for a new or second hand car out of cash and credit will be needed. So what do you do then if your line of credit has dried up. Recession certainly has affected every aspect of business in the UK. Most of these businesses have already taken action like pre pack liquidation or administration which is a good sign. But not everyone is lucky.

This is a problem being faced by a large number of car dealers at the moment. Industry figures reveal that brand new car sales in the UK have fallen by 15. 7% in June this current year compared to June last year. In May fall was 25% year on year.

In the month of June a few 176,000 units were sold across the UK. Many of these may have been sold to industry, with the private buyer sector really struggling to buy due to a lack of credit around for them to utilise.

The Government scrappage scheme which came into effect on 18th May has had some effect with nearly 30,000 vehicles over 10 years old being cashed info £2,000 against the price of a new car. At this rate the scheme that was due to last a year will have exhausted its funds by October. The Government has said it won't be prolonged.

The problem will then re-occur that the market starts to contract yet again.

I am hearing problems from second hand car dealerships that they simply can't move older cars. If you had an opportunity to purchase a second hand vehicle for £10,000, or even a new car for the same amount, with a five year warranty, what would you do?

This means that there are a variety of dealers on the market who have stock that they have tied up, but that they can't liquidate.

These firms have rents to pay within the units that they keep. They have wages to pay, and maybe finance charges for borrowings they may have which they may have utilized to purchase stock.

If you operate a business such as this, you may be needing to take stock of your current situation. If you're struggling it may be possible to take steps to, extricate yourself from debt, and re-start in a debt free company.

A professional consultant, will be able to offer suggestions about something called a pre-pack administration, or liquidation. This will allow the debt to be left behind and also the stock and lease and employees to be transferred to a new company.

To understand more see Finance7.