Second-hand cheap runabouts are soaring: prices up 100% in three months

The cheap second-hand runabout is no longer cheap: price hikes of 100% in three months

A 1998 to 2004 Smart Fortwo could be bought for €1,000 before Christmas. Today it doesn't go below €2,000, and with more than 100,000 kilometres on the clock. This is the case that opens up a recurring complaint among those looking for an old small car to get by: the second-hand market for cheap cars has become, quite simply, a non-market. There is no supply at a reasonable price. There are mark-ups and there is smoke and mirrors.

The diagnosis that keeps coming up in the sector is that small cars are the most sought-after for city driving, and that pushes prices up. On top of that there is a contagion effect: every seller looks at what the neighbour is asking and asks the same or more. The result is a market where a 1998 Fiat Punto Cabrio that was worth €800 is now listed for €1,800, a battered Ibiza GT TDI is advertised at €1,800, and a 2001 Ford Fiesta with 60 horsepower and a wrecked interior is asking €900.

The dealers who inflate the price and dress up the car

Part of the problem has a name: the middleman. Some recount testing a 2001 Fiesta advertised for €900, with the car wrecked and dressed up in the photos, and discovering during the conversation that the seller was a used-car dealer who had picked it up for €300. In that case, the deal triples the price without adding anything to the product. The car is just as old, but it smells of air freshener.

That middleman doesn't repair, doesn't offer warranties and doesn't filter. He just washes the car and puts it in the digital shop window with a new price. The work involved, in the words of those who suffer it, is nil. And yet he is the one setting the market floor: when the dealer pays €300 and asks €900, the private owner with the same car in the garage no longer sells it for €600. He asks €900 too. And so on, all the way up.

The contagion effect: nobody sells for what it's worth, everyone sells for what they see

The mechanism is explained with a property analogy. If someone bought a flat for €75,000 in the year 2000 and now sees similar properties at €160,000, they will ask €150,000 if they're in a hurry or €160,000 if they're not. Nobody goes for the fair price. Everyone goes for the price they see in the shop window. Transferred to cars, the result is that the real value of an old banger has completely detached from its selling price.

Some argue this is simple supply and demand, and that small cars have become scarce because everyone wants them for the city. Against that stands a more uncomfortable argument: most of those cars end up at the scrapyard for €200, because keeping them idle costs money between the MOT (ITV), insurance and taxes. The asking price is not the selling price. And those who genuinely want to sell, cut the price.

Why are old cars going up if new ones aren't selling?

The theory doing the rounds is that the fall in new car registrations is pushing buyers into the used market, and that transfer of demand is pushing prices up. It's the effect some call the third-world effect: when a new car becomes unaffordable, the used one becomes a refuge. And in a refuge, price is set by need, not quality.

Added to this is regulatory uncertainty. Some point out that city access restrictions and the regulatory back-and-forth over which cars will be allowed to drive tomorrow are holding back new car purchases. If nobody knows whether their car will still have a sticker (low-emission badge) in three years' time, many prefer not to buy. And those who don't buy new look for used. The circle closes around the old banger.

The refuge of large saloons and the niche of 4x4s

While small cars are soaring, there is one segment where prices have collapsed: the large saloon over twenty years old. A BMW 7 Series in perfect condition has been seen for €1,300, in contrast to a Citroën C3 with 200,000 kilometres advertised for €5,000. The paradox is that the car that's expensive to run is cheap to buy, and the car that's cheap to run is expensive to buy.

The phenomenon isn't exclusive to passenger cars. Niche small off-roaders, like the Suzuki Jimny, have become objects of desire with laughable prices, in reverse: 18-year-old units with 100,000 kilometres for €5,200, a 2007 for €8,900, a 2010 for €11,000. They're not classics or rare. They're workhorses with luxury-car price tags.

The agreed deal that falls through over €350 more

The bitterest side of the non-market appears when the price has already been agreed. One buyer recounts closing a deal on a 110-horsepower 206 1.6 HDI for €1,450, with the paperwork ready, the traffic report requested and the money in hand. The seller called to say he had kept showing the car and that someone else was offering him €1,800. Take it or leave it. The deal was done. It's true there was no deposit, and that's the nuance: without money on the table, a handshake is worth what it's worth.

The scene sums up the problem better than any statistic. In a market where supply is scarce and the buyer is in a hurry, sharp practice finds fertile ground. The seller has no incentive to honour a verbal agreement if someone shows up offering more. And the buyer, who needs the car to get to work, either swallows it or goes without.

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The uncomfortable conclusion is this: the cheap old car, the one that served as a stopgap while you fixed the real one, has ceased to exist as a category. There are Micras with 55 horsepower left between €500 and €800, Ford Kas between €600 and €1,200, old Twingos between €700 and €1,500. Not much more. And whoever needs one to avoid being stranded, pays. Or walks.