AVERAGE sale values in the disposals market rose in the first quarter of 2005 by nearly £300 over the last quarter of 2004, thanks mainly to increasing levels of demand.

Residual values against original cost when new also rose from 38.5% to 40.1%. However, compared with the same period last year, prices are down by an average of £150 and by 1.3% against cost new according to the latest Manheim Auctions Market Analysis report.

The report, which plots trends across nearly half a million cars in the past two years and 84,000 in the first quarter of 2005 found that the used car market started to pick up, particularly at the end of March.

The report found that there was some weakening of diesel residual values. It said: ‘When increased volumes in the market are considered, demand has remained relatively constant over the past 24 months for petrol derivatives, although there are some signs that demand for diesel models may be weakening.’

Only in the 4x4 sector did diesel models outperform petrol in demand and price performance against CAP. In the medium family category, however, the gap in demand between petrol and diesel increased noticeably in favour of petrol.

It also found that used volumes were up compared with the final quarter of 2004. Average age and average mileage increased marginally to 39 months and just less than 50,000 miles across all sectors, which Manheim believes can be attributed to some vendors holding over some vehicles for remarketing from 2004 into the New Year. The fleet sector was slightly higher, at 42 months/58,420 miles.