AVERAGE prices for three-year-old cars as a whole rose by 6% in 2003, with the much-maligned upper medium sector showing some of the strongest rises.

According to EurotaxGlass's European Fleet Index of Residual Prices for three-year-old cars, the Ford Mondeo and Renault Laguna performed particularly well, due mainly to new model introductions in 2000.

The latest EurotaxGlass's Fleet Index shows that average values in January 2004 were 2.3% higher than in January 2003, and 5.3% higher than in October 2003.

Rick Yarrow, managing director of eurocarprice.com, which compiles the report, said: 'There has been a couple of years of downward trends for residuals, but we have reached the bottom and are on the way up again.

'Obviously the fact that these three-year-old cars are new to the secondhand market had an effect on pushing up values. These are the first effects and then there is likely to be a levelling out or slight drop in the following years.'

In the third quarter of 2003, diesel cars in the UK retained 41% of their original value after three years, up 5.6% compared to the second quarter. Petrol models retained 39% of their original price, up 5.35% compared to the second quarter.

However, the boom of 2003 is not likely to be repeated in 2004, Glass's is claiming.

In its monthly report for March, managing editor Adrian Rushmore, claimed there was a slight easing back on activity in the auction hall and prices. Rushmore said: 'Unlike this time last year when auction activity was frenzied, this year the pattern has been steadier. Vendors who believed that high mileage or poor condition cars would be absorbed comfortably into a busy auction market were a little disappointed.'

Rushmore claimed that in the last few weeks prices for most cars up to two years of age have either remained static or eased back gently, in contrast to the same time last year when prices were still rising.