Fleet News

RVs optimism may turn sour

A STRONG start to car sales this year, reflected in an increase in used car values, could be transformed within months, industry experts claim.

Residual value increases are unlikely to reach the levels seen in 2003, according to Glass's Information Services, and could even start falling back.

The group believes that retail demand for used cars will not be sufficient to spur increases.

Adrian Rushmore, managing editor at Glass's Information Services, said: 'It is very unlikely that the market as a whole will experience similar levels of residual value growth over the coming year, as it did in 2003, and we have already seen less active sales of used cars during the first four months of 2004.

'Overall, it is expected that values will drift back gently. There is likely to be enough retail demand to support values but not enough impetus to drive further increases.'

But Rushmore dismissed any fears of a residual value crash.

Consumers are choosing to buy younger cars than they did two or three years ago and the growth in two-car families is now moving into generations of three-car families.

Rushmore said: 'While the supply of used cars into the market will continue to accelerate, no-one should fear a residual value slide of anything like the magnitude that was suffered between 1998 and 2001.'

Sectors that have driven an uplift in residual values during 2003 include large MPVs, sports utility vehicles (SUVs) and large 4x4s. One-year-old MPV residual values increased from 67.6% to 71.8%. SUVs noted improvements across three-year-old models, up from 51.4% to 55.5%, and large 4x4s had residual values of 81.3% on average after one year and 55.5% after three years.

However, large non-premium brand cars have had the worst residual values in the market, according to Glass's.

Rushmore added: 'Petrol variants predictably hit the lowest points, at 51% retained value after just one year and on 33% at three years.

Diesel variants do perform notably better, with one-year-old residuals at 61.9% and three-year-old residuals at 38.3%.'

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