Fleet News

Marketwatch: MG Rover prices may be ‘over-reaction’

RESIDUAL values of MG Rover cars will drop by a minimum of 10% in the wake of the car company going into administration, according to Glass’s.

With uncertainty over the future of the car firm, its dealer network and any warranty back-up, Glass’s says the full extent of the closure may not become apparent in the short-term, especially as some MG Rover dealers are offering new models at massively discounted prices.

Adrian Rushmore, Glass’s managing editor, said: ‘It’s still too early to provide a definitive assessment of how MG Rover is perceived by the buying public and how this translates into what they are prepared to pay. This uncertainty has resulted in low trade and part-exchange prices as the measure of risk is considered to be high by buyers.

‘When prices start to stablise, it’s likely that some of the recently quoted prices will appear to be an over-reaction.’

News of further falls in values comes at a time when MG Rover prices are already at a low level, following months of uncertainty over whether or not the Shanghai Automotive Industry Corp would buy the business.

Rushmore added: ‘Prior to the closure announcement, market jitters had already repositioned prices and, for the key Rover 25, 45 and 75 models, the residual value ranking was already low.’

While all MG Rover products will be hit, it is the younger cars which will suffer the most, while cars more than six years old will scarcely be affected as prices are already so low in this market and buyers of these cars are far less brand conscious.

Glass’s says warranties have to be offered to make younger cars saleable and prospective buyers need to be reassured about future servicing and parts back-up.

While acknowledging that some of its price predictions may be part of an over-reaction within the market, Rushmore added: ‘What we are reflecting is the highest possible level that prices could settle at in the coming weeks, given that values are now lower than all competing brands.’

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