GLOBAL production over-capacity will ensure that the nearly new car market is here to stay and the rapid growth witnessed over the last five years is likely to be sustained. According to a comprehensive new report from MarketLine International, the European market in 'newsed' cars is booming as private buyers latch on to the benefits of letting someone else take the initial depreciation hit.

The report predicts annual growth rates of up to 10% in some European countries - adversely affecting new sales and fundamentally changing the structure of the retail motor industry. The UK nearly new market is the most mature in Europe and has the highest proportion of nearly new to new car sales, although Germany accounts for the largest volume at 267,571 units.

Overall, the European nearly new market is now worth in excess of £9,500 million with annual turnover of just over one million vehicles last year compared with 766,000 in 1992 (see chart below). Germany, Britain and France dominate the overall picture, accounting for 72.8% of the market, but countries like Sweden and Denmark are experiencing faster rates of growth.

Increasing competition in the US between the nearly new and new car market has Ford, Chrysler and GM to re-evaluate their fleet sales strategies and since 1993, all three have reduced the discounts available to rental and leasing companies while the latter two have begun to reduce their involvement in the industries themselves. These moves are being echoed in the UK, where the big three manufacturers are all making efforts to reduce their short-term rental business and Rover appears to be distancing itself from fast-cycle fleet business altogether.