Fleet News

Industry clashes over used values

FLEETS could be facing a turbulent year selling end-of-term cars amid conflicting claims over residual values.

Experts CAP and the British Vehicle Rental and Leasing Association claim values are buoyant. But according to residual value analysts Glass's Information Services, residual values fell 6% faster during 2002 than 2001, and with a sluggish economy, more used cars likely to hit the market and war in Iraq, the signs are that there will be further drops.

Contract hire firm Pendragon Contracts believes the petrol upper-medium sector will take the biggest battering, hitting an all-time low during 2003.

Paul Ashton, sales director, said: 'The upper-medium non-premium car is the victim of both long and short-term problems.

'In the longer term, prestige badges on cars of this size are becoming ever more desirable and, with list prices of Jaguar X-type and Mercedes-Benz C-class now starting at under £20,000, ever more accessible.

'Additionally, these large mainstream cars are continuing to grow in size with every generation. For many drivers and their families, the latest upper-medium cars are simply bigger than they really need on a daily basis.'

Ashton said there was a public perception that fuel prices would rise because of war, although this was not necessarily fact.

As a result, large petrol-engined cars in this class will become difficult to sell. He claimed that some petrol model RVs could fall to about 20% after three-years/60,000-miles. It is not just upper-medium cars that will be hit, Glass's claims. Adrian Rushmore, managing editor at Glass's Information Services, said: 'The most dramatic falls in residual values during 2002 were for sectors that enjoyed the biggest growth in new sales over the past two years, namely compact MPVs and premium-brand upper-medium cars.

'These two sectors each now command more than 5.5% of the market and their growing popularity has generated increased supplies within the second-hand market, undermining previously firm residuals.

'By contrast, three-year-old full-size MPVs, off-road 4x4s and sports utility vehicles have seen their values fall only by an additional 1% in 2002 compared to 2001.

'Even though sales have increased significantly over the past two years, it was from a very low base and, importantly, supplies remain limited, with each of these sectors still accounting for less than 3.5% of the total market.'

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