A RESIDUAL value 'bubble' is set to burst and send used car values plunging to record lows, used car pricing experts CAP warned this week.

An abnormal combination of factors, including a shortage of used stock, have created unrealistically high trade prices, it says.

Once the market returns to normal, dealers will be left with overpriced cars they will have to sell at a loss. CAP says ex-fleet cars are currently fetching high prices but they could fall if the market changes.

Tony Styles, senior editor of Black Book, said: 'Across the country dealers are telling us they can't find good cars to sell and that they are struggling to find any margin at all in those they do find. This is a false market and the only way to survive it is to buy absolutely right, every time.

'There is a supply crisis and this is creating a false market which cannot be sustained. When this blip passes there could be real problems.'