Fleet News

Volume sellers lose out as niche residuals rise

THE residual value performance of the volume fleet sector is up to 25 percentage points below that of some niche sectors, according to new figures from Glass's Information Services. Based on October trade values for 1996 N-registered vehicles with average mileage the volume small car sector outshines the rest of the volume market with a typical 40% retained residual value based on a list price of £8,500.

Taking each manufacturer's best-selling model for each niche and sector Glass's Guide calculates that lower medium sector cars retain 36.6% of their typical £13,000 cost, upper medium sector vehicles 33.5% of £16,000 and large executive cars 31.4% of £21,500. Meanwhile, niche sectors such as 4x4 off-road vehicles like Range Rovers retain 43.4% while premium sector convertibles such as the Rover MGF retain 56.3% of their list price.

The correlation reflects that volume sector vehicle purchases are supply driven, while niche sector vehicle purchases are demand led. While premium convertibles are the top residual value performing sector retaining 56.3%, premium upper medium sector vehicles such as the BMW 3-series, Audi A4, Mercedes C-class and Saab 900 take second spot even though several percentage points have been shaved off their residual values in the last year due to increased supply into the market.

Glass's says: 'The moral for the leasing industry here is that if low rental rates are linked to high residual values, it is only a matter of time before extra new car demand translates into extra used car supply, and down go the residuals.'

And Glass's admits to being surprised by the performance of the MPV sector where, despite almost every manufacturer launching into the niche, residuals remain buoyant. Everyone feared that once these cars started feeding the used car market, residuals would be ravaged. In the event their versatility as 'carry alls' was underestimated. The future looks particularly bright for the Renault Scenic and Vauxhall's new Zafira,' it says.

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