Fleet News

Don't panic over residual values, fleets told

FLEETS should not panic that new car price cuts will undermine residual values, according to CAP Motor Research. The used car market specialist has dismissed 'false assumptions' that a residual value crisis is looming that could wipe up to a quarter off the value of the UK fleet parc.

CAP publishing director and general manager Andrew Wilkinson said there was neither statistical nor economic evidence that used car prices are tied to new car prices. 'In reality there is evidence to the contrary. For example, when Special Car Tax was phased out it reduced new car prices by 10%, yet over the following three years used values rose by 24%,' he said.

'The absurdity of the notion is easily demonstrated. A 1994 Ford Mondeo cost about £1,000 less new than the 1993 model, but you would surely be hard pressed to find anybody who would pay more for the latter simply because it cost more new.' Wilkinson argued that used car buyers do not research the price of new cars, but instead base their buying decisions on issues such as image, economy, reliability and functionality. But at rival forecaster Glass's, Bill Carter, editor of Autoprovision, said there was a clear link between new and used car prices, particularly in the nearly-new sector, with a trickle down affect all the way to three-year-old vehicles.

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