USED values for three-year-old fleet cars will fall by up to £300 on average next year, prolonging the residual value misery. Glass's Guide is predicting a 7% fall in used car values, while CAP Motor Research is predicting falls of between 4% and 6%.

The source of the fall lies in the record number of new cars sold three years ago that will be defleeted next year, a figure much higher than the used car market can sustain. For years, manufacturers have pushed increasing numbers of new cars into the market without enough buyers in the used market.

Ramesh Notra, economist for CAP Motor Research said: 'Over-supply and depressed demand are the same thing, so if demand increases, the market will be affected. There is a move towards a more stable market, because although used prices are falling, list prices are also lower.'

Adrian Rushmore, chief car editor for Glass's Guide, said: 'We expect used car prices to ease back by around 7% next year. Because of bumper levels of sales in 1998, and assuming 65% went into three-year cycles, there will be almost 200,000 additional cars for the used car market to absorb in 2001 than there were in 1995.