Fleet News

Marketwatch: Experts divided over late plate values drop

THE value of one-year-old cars has dropped year-on-year, with industry analysts divided over the reasons and the effect it could have on three and four-year-old fleet cars.

According to EurotaxGlass’s, values of nearly-new, late-plate cars are falling at a faster rate than any other sector of the used car market, mainly due to the actions of dealers who spent last year registering cars without bona fide buyers in order to hit manufacturer sales targets.

As a result, it claims over the past year one-year-old values have fallen by 4.2% to an average price of £9,995 due to an excess of vehicles, especially those now coming back from dealers. Alan Cole, editor for Glass’s Market Intelligence Service, said: ‘There is a limit to how much more one-year-old values can drop before the effect on three-year-olds become more pronounced, causing their values to reduce further.’

Research by CAP has also detected dropping values in one-year-old used cars, but believes the situation is perfectly normal and more to do with car lifecycles than dealer tactics.

Stuart Empson, CAP senior analyst, said: ‘Our research suggests nothing unusual in the current reductions in late-plate values. Using a representative like-for-like basket of late-plate cars, there has been a consistent year-on-year weakening of used values.

‘Between March 2005 and March 2006 this amounted to 5.5%, while the year-on-year average since January 2003 has been 5.4%.

‘This is entirely attributable to the ‘lifecycle effect’, meaning the natural ageing process that all cars go through as they move further into their normal lifecycles.’

Empson also claimed there was no current evidence of supply increasing.

He added: ‘In fact, between January and March this year there was a reduction in supply of late-plate vehicles in the marketplace.

‘Supply levels in March 2006 were also lower than last year and the year before. Anecdotal research is also currently suggesting that dealers are unable to source as many late-plate vehicles as they would ideally like.’

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