Fleet News

Used car values keep on rising

STRONG demand and a well-matched balance of supply has led to a steady increase in the residual values of many used cars in the UK over the past 12 months, latest research claims.

Analysis by Glass's Information Services highlights improvements in the prices being achieved by the average one, two and three-year-old vehicle in the UK.

According to Glass's, three-year-old cars have been the highlight of the marketplace over the past year, with the average retained value increasing from 44.7% in March 2003 to 49.9% in 2004.

Although this figure may seem high to volume fleet operators, it reflects the entire vehicle parc and highlights the growing volume of premium models available.

Johnathan Brown, car editor at Glass's, said: 'Many dealers have continued to report a lack of three-year-old retailable part-exchanges, which has added to the problem of sourcing cars.'

But Glass's predicts that the market as a whole is unlikely to see similar levels of growth over the coming year.

Brown added: 'By comparison with 2003, sales of used cars during the first quarter of this year have been less active. Overall, we expect values to drift back gently, with the inherent strength in the market bolstering values but lacking the impetus to drive further increases.

'By the end of the year we will also see used car supplies increasing – the inevitable legacy of several years' record new car sales – and this could result in further residual value drift.'

The sectors driving the uplift in values include the large MPV sector, with three-year-old examples growing from 47.3% to 52.5%.

The Sports Utility Vehicle (SUV) sector has also shown improved residuals, but predominantly for three-year-old vehicles, which have moved over the past 12 months from 51.4% to 55.5% retained value.

Vehicles in the large 4x4 sector show strong resistance to depreciation, with petrol versions at 55.5% after three years and diesels at 60.4%.

The traditional family car sector also shows improvement, at 39.6% after three years.

Tom Madden, customer affairs director of BCA, said the auction giant had also seen strong prices: 'We have enjoyed a demand-led market throughout the first quarter – with buyers competing for the best examples and keeping prices – and conversions – high.'

A spokesman for CAP Motor Research said: 'Late-plate cars are holding up well and generally outperforming the rest of the market.

'The two to four-year-old retail market remains core and again this sector is enjoying more stability than in the past.

'A note of caution should be sounded for the rising numbers of non-traditional fleet cars entering the market, including the Alfa Romeo 156 and Land Rover Freelander, which are slipping as volumes rise.'

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