THE residual values of Britain's best-selling fleet car - the Mondeo - have crashed to an all-time low following Ford's decision to flood the new car market with thousands of discounted ageing vehicles. Prior to the surprise move, which is seeing Mondeos being sold at discounts of up to £3,000, Glass's Information Services was quoting residuals of 29.7% at three years/60,000 miles while CAP Motor Research was quoting 32%. However, both said Ford's move would result in further falls to new record lows and take second-hand values in the rest of the upper medium sector with them.

The warnings of residual turmoil are bound to send shock waves through the leasing and rental industry, which has already suffered massive second-hand car value losses in the last 16 months, and outright purchase fleets which rely on strong used car values when making wholelife cost calculations.

Ford has declined to reveal exactly how many 1998-build Mondeos have entered the market in the last three weeks, but one source said it was about 2,000. Some commentators believe it to be higher, as Ford's new car sales figures in the final five days of April jumped dramatically.

The manufacturer said the discounts to dealers were part of a range-wide 'summer sale' which would last for several months but insisted that the Mondeo offer was 'a one-off' hit. Ford also denied that the move was a precursor to an across-the-board price reduction.