Uplift in used car demand cuts rates of depreciation

Rates of used car depreciation slowed during the third quarter of 2005 (July to September), and values are expected to stabilise further still during October. The findings, published by EurotaxGlass’s in the latest Glass’s Used Car Market Index, indicate that the average three-year-old car (2002 ’02-plate with a typical 36,000 miles) was worth £6,650 by the end of September, representing a fall in value of
3.6 per cent, or £250, over the quarter.

At the start of the last quarter (July), used car values were on average £275 lower than at the same point in 2004. However, that deficit reduced to £200 by the end of September, and EurotaxGlass’s report that it should shrink to just £50 by the end of this month.

"The improvement in residual values is due to a market-wide increase in trade demand," explains Alan Cole, Editorial Consultant for EurotaxGlass’s. "In the early part of the summer, dealers were less than optimistic about sales prospects and consequently bought in less used car stock. When it became apparent that there was a sustainable level of consumer demand, and their stocks were less than adequate, general wholesale trading increased, with the result that prices became firmer by September."

However, values continue to be strongest for well-specified vehicles in those sectors most in demand, such as small and family cars and those with diesel power. "There must also remain a big question-mark as to whether the buoyancy experienced towards the end of the third quarter and into October can continue for the last two months of the year," concludes Cole.