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4% price drop on larger 4x4s and model mix imbalance emerges

‘The month following the bank holiday period normally brings some welcome stability to the used car market. This year values for most models have been holding up strongly, with some notable exceptions. Convertibles and coupes are still out of favour and there has been a weakening of values on 4x4s, especially older larger models such as the Range Rover, Mercedes M-Class, Hyundai Santa Fe and Mitsubishi Shogun. For June we have reduced these values by up to 4%.

‘Looking ahead, perhaps the final quarter of 2013 will see supply increasing and values easing. There is already plenty of choice in the super mini segments – Fiesta, Mini, Corsa etc – and this is putting some pressure on values. Clean low-mileage examples are still thin on the ground though and these values will continue to buck the downward trend. 

‘A problem looming ever larger is the imbalance in the model mix available to used car buyers. The issue is that demand in the used market doesn’t always match the choices new buyers made a few years previously. Because of the disproportionately high number of small cars registered, if you are looking for something with more space then the choice is quite limited, particularly if you don’t want a people carrier or SUV.

‘Since 2007, “A sector” registrations (mini or city cars such as the Citroen C1 and Ford Ka) have more than trebled, “C sector” aregistrations (lower-medium sized cars such as the Ford Focus and Vauxhall Astra) have dropped by a third and “D sector” registrations (upper-amedium sized cars such as the Ford Mondeo and Vauxhall Insignia) have nearly halved. Meanwhile, sales of sports cars have also declined by a third as people opt for a more versatile choice, such as an SUV. 

‘There is a “premium v non-premium” angle to the model mix issue too. Premium brands have done really well over the last five years, with registrations surpassing manufacturer expectations. The appeal of a premium brand goes a long way in the new market – they tend to have strong residual values and the monthly rates can be very competitive for lease/contract hire. However, many used buyers are wary of premium brands because they associate them with higher servicing, maintenance and running costs.’ 

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Natalie Middleton

Natalie has worked as a fleet journalist for 16 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.