Fleet News

Five key issues to assess values

FIVE key issues need to be considered by fleets if they are to accurately assess future residual values for their fleet vehicles, according to CAP Monitor.

The residual value expert uses the key issues as a benchmark for assessing how key financial issues might affect the economy and its potential knock-on effect on the used car market.

One of the most important will be changes to block exemption, the system for controlling the sale of new cars.

Experts at CAP Monitor said: 'The new block exemption represents only a gradual evolution and retains many of the features of the old system. As a result, residual values are not expected to fall in the medium term due to changes.'

Another key European issue is the value of the pound against the euro, as it has fallen to a four-year low recently. CAP Monitor has assumed that the timetable for any UK entry into European Monetary Union will be delayed beyond the next Parliament, although there are signs of the UK economy converging with Europe anyway.

Company car tax is the third key issue, according to CAP Monitor, which said: 'A major negative impact is the expected increased uptake of diesels. Premiums for diesel vehicles in CAP Monitor are not expected in all cases to be badly affected by increased supply and this is reflected in the forecasts.'

Growing demand for alternative fuels is a fourth major area, with CAP Monitor adding: 'Values for bi-fuel vehicles are generally lower than petrol equivalents. We assume this will remain a relatively small sector of the market, with limited demand and infrastructure.'

Finally its global economic outlook suggests the eurozone as a whole is on the brink of recession, with rising unemployment and low business confidence. This will need to be closely watched by fleet decision-makers, both for disposal strategies and for its effect on future demand for new cars.

However, although global economic factors need to be watched, fleet decision-makers can have an effect on residual values with a simple decision.

CAP Monitor said: 'We strongly recommend, due to a change in market expectations, that metallic paint is treated as the norm and a negative value is applied to flat (non-metallic) colours.'

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