In 2006 when we published our used car report, we took the view that disposable income would fall over the ensuing five years to 2011. And while the basis of our reasoning - tighter monetary policy - now appears almost irrelevant in the light of recent events, the reduction in disposable income has surely come to pass and is likely to get worse before getting better.

Less disposable income will impact on motorists whether running a privately-owned or company-owned car. The most obvious effect is a reduction in travel, which clearly affects demand for servicing and repairs, and during the recession in the early 90s vehicle-kilometres levelled off after a period of substantial growth.

Another likely outcome is that motorists will keep their cars longer. Based on total new and used car sales as a percentage of the car parc - so called 'parc turn' - the current average length of ownership is around 3.1 years and it has been at this level for most of the decade. Surprisingly the average before the recession of the early 90s was shorter. Or perhaps it is not surprising given that cars are so much better built these days. As the recession took hold in the early 90s, the frequency of change increased by 15% and it was new cars that took the hit with sales falling 13% between 1989/1990, and 21% between 1990/1991. On the other hand, used car sales remained relatively stable throughout the period of the recession.

Overall the evidence from the early 90s suggests that although motorists kept their cars longer there could have been a switch to buying used rather than new when they did change. As far as we know there was no research at the time to prove that this was the case, but it seems entirely logical that motorists in reduced circumstances will opt for cheaper alternatives.

Of course franchised dealers already focus a huge amount of effort on used car sales, and this effort needs to be re-doubled if the new car market goes pear-shaped. Or, as the Americans might say: “Bet the farm on used cars!” But which used car market segment will prosper? Households with lower incomes are most likely to be affected by any downturn - the primary market for used cars costing under £6,000. The new to used switchers, and these could even include companies, will be looking for newer and more expensive used cars including 'nearly new'.

With approximately one-third of all independent used car dealers specialising in older used car sales and nearly 60% selling used cars at a retail price of £5,000 or less, any downturn could favour well-prepared franchised dealers over independents. The 'get out of jail card' for independents will be to specialise - prestige, nearly-new cars, performance, etc. For both dealers and independents betting on the used car market, the key issue will be sourcing the right used stock, which is good news for the auctions.

Trend Tracker director Chris Oakham contributed this topical advice for dealers in the credit crunch-afflicted car sales market in his column in the subscription monthly Auto Retail Bulletin (See www.auto-retail.com for subscription details.)