2017 proved to be a fascinating year in the auto industry. Amongst the economic climate, political uncertainty and the Government’s announcement of a 2040 ban on petrol and diesel automobiles, the sale of new cars plummeted drastically. In fact, new car sales fell for the first time in six years with diesel sales falling by almost one-fifth.
The figure was down 5.7% from 2016, which shows a lack of consumer confidence that is expected to carry on into 2018. So, what about used cars? Used car sales outperformed new cars in 2017 and this is because they are a smaller and therefore much safer investment. Until there is clarity over clean air plans and the economy improves, it seems likely that motorists will continue to shop in the used car market.
This has also had an interesting impact on car warranties. When a motorist buys a new vehicle they benefit from a manufacturer’s warranty (typically 3 years), which will cover the cost of parts and labour for mechanical or electrical faults. Now that more motorists are entering the used car market and looking at vehicles with no warranty, it means that they need to purchase an extended car warranty.
An extended warranty can be arranged (usually) for 1, 2 or 3 years and will cover mechanical and electrical faults. Many warranties also have additional features like recovery costs, car hire and diagnostics. There are terms with extended warranties, however, with older automobiles costing more to cover as they are deemed higher risk. As a result of this, an increasing amount of motorists need to educate themselves on car warranty pricing when shopping for a used automobile.
It is likely that in 2018 used car sales will continue to perform, but we are also likely to see motorists opt for better and newer used automobiles as opposed to older cars. In addition to being more appealing and economical, these newer used cars will also help motorists savings by taking out a cheaper extended car warranty. The other possibility is that motorists will purchase much older used cars but not take out an extended warranty. This could be a huge risk, as they could be left out of pocket if the car were to encounter any issues as they can be expensive to repair.
The sales of new car sales in 2017 is a reflection of the public’s uncertainty over the future both politically and due to the Government’s proposed 2040 ban on petrol and diesel. The used car market, meanwhile, continues to perform well which means that there has also been a rise in extended warranties, but the public need to consider the cost of warranties when shopping for used cars in 2018 and where to obtain them from.