Fleet News

Used car price predictions look gloomy

SMALL improvements in used car prices may be shortlived, with disposal prices for three to four-year-old models set to fall by 11% over the next three years, according to Interleasing.

During 1999, the firm claims, residual values dropped by 12% and last year by 12.7%, but it warns that prices will fall even lower.

Its predictions are at odds with residual value guides, which believe the market is set to recover slightly or stabilise in the next two years.

Nick Brownrigg, managing director of Interleasing, said: 'Theoretically, if the rate of fall last year continued, residual values would hit zero by 2007.

'Although that would be unimagineable, companies which own their fleets are particularly vulnerable to the market's movements.'

He said outright purchase fleets should consider outsourcing their residual value risk through products such as sale and leaseback, or though leasing new vehicles.

Figures from the Alliance & Leicester Car Price Index showed an 8.3% rise in the value of three-year-old cars in June, compared with 4.1% since May.

CAP Network said three-year/30,000-mile cars had risen by 4.2% year-on-year in July. However, fleets running vehicles for more than 60,000 miles will have seen prices paid for them fall by about 2%.

The Alliance & Leicester Car Price Index also revealed that new car prices were increasing after last year's 10% price cuts by manufacturers.

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