Fleet News

Upper medium RVs under threat as buyers downsize

THE residual values of upper medium cars are under severe pressure as used car buyers downsize into popular lower medium sector cars such as the Ford Focus, Vauxhall Astra and Volkswagen Golf. While company car drivers are still reluctant to downsize, despite the benefit-in-kind tax benefits of a cheaper car, buyers of second-hand vehicles are increasingly appreciating the value-for-money, specification and space provided by lower medium models.

CAP Motor Research says the downsizing phenomenon in the used car market has developed to such an extent that it is forecasting that some lower and upper medium cars will have almost the same residual value at three years and 60,000 miles. Mark Norman, editor of CAP Monitor, said: 'We are now writing very close residuals, in some cases, for cars in separate sectors because you are getting spec and technology until recently only seen in the larger car. Clearly that negates the need to move into larger cars simply to benefit from such features.'

This is leading to a convergence of residual values, with forecasts for cars like the Vauxhall Astra, Ford Focus and Volkswagen Golf rising, while predictions for upper medium cars like the Ford Mondeo and Vauxhall Vectra are falling.

The latest issue of CAP Monitor predicts the £15,850 Ford Mondeo 1.8 LX five-door with air conditioning will be worth £5,200 at three years and 60,000 miles, losing £10,650 over the period. The £14,100 Focus 1.8 LX five-door with air conditioning is forecast to be worth £5,225 at the same stage, a depreciation of £8,875. CAP also forecasts a residual value of £5,125 for the £15,690 Vauxhall Vectra 1.6 16V LS five-door with air conditioning, a loss of £10,565. This compares to a loss of £8,820 for the £13,520 Astra 1.6 16V LS five-door with air conditioning, which CAP predicts will be worth £4,700 at three years and 60,000 miles.

These compare to a residual value of £6,225 for the £13,975 Volkswagen Golf 1.6S five-door, a loss of £7,750 over three years and 60,000 miles, depreciation which puts it within reach of the £6,550 forecast for the £15,460 Passat 1.6S, representing depreciation of £8,910

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