THE values of three-year-old cars improved during the first three months of 2006, the third successive quarter of easing depreciation rates.

The average 2003 03 plate car, with a typical 36,000 miles on the clock, ended the first quarter worth £6,750.

However, despite the improvement that price is still £275 lower than at the same point in 2005.

According to figures from EurotaxGlass’s, values fell by 1.7% or £125 year-on-year during the first three months of the year.

The company predicts a further drop of 1.5% by the end of April, to an average of £6,650.

SUVs held their values best, depreciating during the first quarter by an average of 1.6% or £125. Upper medium executive cars held the value the worst on average, losing 2.2% or £225.

Alan Cole, editor at Glass’s Market Intelligence Service, said: ‘During the first quarter there was an uplift in buying activity among used car retailers, while sales from the forecourt have avoided the worst of the decline seen in the new car market.

Trade demand has been largely matched by retail demand, with most customers focusing on used cars that they perceive as representing good value for money.’

Cole said the used car market had been spurred on by a discernable increase in confidence among retailers, something lacking at the end of 2005.

He said: ‘Many of the auctions continue to welcome trade buyers they have not seen for some time and franchised dealers made more frequent visits.

‘Three-year-old cars are still favoured and supply here is only just keeping pace with demand.’