AM Online

Used car market 'not ready' for prestige diesels

Residual values are determined not by manufacturers, or indeed Cap Monitor, but the typical used car buyer.

To understand the whys and wherefores of residuals you must get inside the head of that person. How will they perceive the make and model itself? What will easy and abundant availability do to their perception of the car's worth?

The golden rule here is: the greater the availability of a particular model, the more it will lose in the used car market.

But this does not guarantee rock solid values for the rare, simply because they are hard to come by. Some models are few and far between basically because nobody likes them.

The second most important factor in the used car buyer's mind is the engine. For petrol models the larger the engine size the bigger the depreciation. For diesels different factors are at work, with a greater risk of the vehicle being annoyingly underpowered by a smaller engine.

But when it comes to comparing diesel power versus petrol, in almost every case the diesel will retain its value better.

There is no such thing as a typical used car buyer, whose definition is set in stone. Opinions and perceptions change. We can identify clearly defined customers for some market sectors but their priorities can be very different from those looking at another sector.

While we have spoken previously of the economic benefits of diesel thanks to its economy, in the prestige 4x4 market diesel is losing some of its lustre.

Everything we have said about diesel is true, but the wealthier 4x4 drivers often prefer the performance of petrol - and can afford to pay for it.

Much the same is true in the prestige car sector. For years cars in this sector have been driven predominantly by petrol engines, with the vast majority of Jaguar, Mercedes-Benz E Class and BMW 5 Series buyers not really giving a hoot about the cost of petrol.

In many cases the used market is not yet ready for diesel derivatives of these cars on a large scale although given the inevitable upward rise of fuel prices over the coming years it is a pretty safe bet that their popularity will increase.

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