The silver lining

Friday 22 May 2009

I don’t know about you, but I’ve had enough doom and despair to last me a lifetime. Believe the hype and the British motor industry is in the sort of condition you’d expect to find a week-old corpse in. But, as is always the case with downturns, there are actually some areas where things are going along nicely.

Yes, the typical car showroom resembles a wake being held at a morgue. Those sales executives who have managed to avoid being laid off are getting more chances to develop their skills at suduko and online solitaire – while at the same time pretty much everybody who works at a car factory is getting several extra weeks of holiday.

But in some areas, business is booming. First, private car leasing. Punters are deciding that they would rather get someone else to swallow the depreciation on expensive new metal, and I hear that business is brisk. Even better, from their point of view, are the deals being offered by desperate manufacturers to move unsold stock into the fleets.

Next, and the real cash bonanza, is for those businesses that make their money storing cars. If you’ve got an old airfield to hand, the current situation is like winning a double rollover lottery. I’m told that there’s barely a Vectra-sized patch of tarmac in the country that doesn’t already have at least one Vectra on it.

It’s a problem across the industry. Avonmouth and Portbury docks are filled with thousands of imported cars that can’t be sold, while Southampton docks are now home to 10,000 British-built Hondas that can’t be exported as demand has collapsed. The problem isn’t just all the unsold new cars – also the tens of thousands of fleet cars that are coming to the end of their lives as company vehicles and then finding a total absence of buyers.

The net result is that the charges for storing unsold cars have been increasing dramatically, leading to some cash-strapped businesses trying to cut costs. I’ve heard one story about a large dealer group in the north of England that opted to cut its storage costs by leaving cars parked on local residential streets.

Next up, specialist vendors of quality old cars. Canny punters are quick to realise that the most easily-avoided motoring expense is depreciation. Throw in the fact that thousands of people are being made redundant and losing company cars and you’ve got the recipe for a nice little business model.

Take the example of my mate Jim, who left the new car game a few years ago to set up as a specialist in decent older metal. Mostly he deals in three-to-eight year old Saabs and Volvos, and he tells me that he’s actually doing better now than he was a year ago. A typical transaction? He buys a 2002 Saab 9-5 for around £1500 at auction, spends a couple of hundred quid tarting it up and then moves it onto somebody who has recently lost a company BMW 5-series for £3000. Nice work, if you can get it. Then there are scrapyards. For decades, punters have been moving away from DIY maintenance – but the recession means that costs are being cut with some old-fashioned elbow grease. Go to a main dealer to get a knocked-off wing mirror replaced on a five-year old Merc C-Class and you’re looking at the thick end of £300 to get the job done. Dodge the oily dogs at your typical ‘end of life vehicle’ centre, find the right part and remove it yourself and you’ll it done for the £100 the part costs you. For half an hour with a screwdriver, that’s money in the bank.

And finally, this is the perfect time for anybody who has been saving their pennies for their dream supercar. You didn’t need to be an economist to work out that the sheer number of Bentleys and Astons being sold would make them vulnerable to value collapse, and so it’s proved. For anyone considering an Aston V8 or a Bentley GT Coupe, there’s an abundance of cars to choose between, with values plummeting. The only question is how far prices will fall before they stabilise, but if you’ve got money in the bank then this is the time to land yourself an outrageous bargain.