There was a further modest improvement in the residual values of three-year-old cars during the first three months of 2006 – the third successive quarter in which rates of depreciation have eased. According to the latest Glass’s Used Car Market Index, the average* three-year-old car (2003 ’03-plate with a typical 36,000 miles) ended Q1 2006 worth £6,750. Despite the improvement, this figure is still around £275 lower than at the same point last year.EurotaxGlass’s, the publishers of the report, says values fell by 1.7 per cent, or £125, during the first three months of the year, and predicts a further drop of 1.5 per cent by the end of April, to an average of £6,650.
“During the first quarter there was an uplift in buying activity amongst used car retailers, while sales from the forecourt have avoided the worst of the decline seen in the new car market,” comments Alan Cole, Editor at Glass’s Market Intelligence Service. “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 says the used car market has been spurred-on by a discernable increase in confidence amongst retailers, which was lacking at the end of last year. He adds, “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.”
The full Glass’s Used Car Market Index full report is free – just email: marketing@eurotaxglass.co.uk quoting reference ‘Index 8’ in the subject line.
The detail – extracts from the latest Glass’s Used Car Market Index
1) Trends in one-year-old used car values
At the end of the first quarter of 2006 the average value of a one-year-old, 2005 ‘05-plate car was only £150 or 1.6 per cent below the position in January. The quarter’s depreciation trend was lower than that experienced during the last quarter of 2005, largely because general trading conditions were more buoyant.
Values are expected to fall at a greater rate during April as trade buying loses a little momentum and supply increases with the new March plate creating an influx of part exchanges. Furthermore, registrations of greater numbers of demonstrator cars by dealers may create more price pressure for one-year-old vehicles.
2) Trends in three-year-old used car values
See main text, above.
3) Trends in three-year-old used car values by market sector – key examples
The Used Car Market Index outlines residual values trends in major market sectors. For further detail of the residual value performance of individual models and other sectors, please contact Alan Cole at EurotaxGlass’s on 01932 823788.
Some of the sectors covered in the Index include the following:
· Lower-medium cars (mid-sized family hatchbacks): During the first quarter of 2006 the average value of a 2003 ‘03-plated lower-medium car fell by £100 or 2.3 per cent, reflecting a slowing in the rate of depreciation seen during the final quarter of 2005. Retained value, as a percentage of original new cost, varies from 56 per cent for the Volkswagen Golf to 23 per cent for the Kia Mentor.
· Upper-medium cars (volume-brand larger family saloons and hatchbacks): The average three-year-old ‘03-plated upper-medium segment used car lost £100, or 2 per cent of its value over the last three months – an improvement over the last quarter of 2005. The Honda Accord leads the segment in residual value terms, holding on to 52 per cent of its original cost new after three years. The Fiat Marea fares worst, retaining a mere 14 per cent.
· Upper-medium executive cars: During the first quarter the value of the average 2003 ‘03-plated upper-medium executive car continued to fall at a slightly steeper rate than the wider market, and by March was £225 or 2.2 per cent lower than at the start of the year. Looking at trade value as a percentage of cost new, the top performer is the Lexus IS200 retaining 53 per cent, while the worst performer is the Volvo S60, at 37 per cent.
· Sports Utility Vehicles (SUVs): A typical three-year-old ‘03-plated SUV fell in value by 1.6 per cent or £125 during the first three months of 2006, an increase in the rate of depreciation experienced during the final quarter of 2005. The buoyancy of this segment growth has led to an increase in the supply of used examples, but values have been no more adversely affected than for the wider market. The Kia Sorrento tops the residual value league, holding on to 60 per cent of its original cost new after three years and 36,000 miles. Worst performing is the Land Rover Freelander, at 36 per cent.
