Nearly new cars are becoming the hottest buys in the used car sector while the market for older cars is rapidly declining, according to research by remarketing company GRS.

Of 200 dealers covered by the research, just 14% claimed to focus on retailing older cars (three to five years). The reasons given for turning to newer vehicles (up to two years old) were the fall in residual values, making nearly new affordable to more customers, and the lower margins on older vehicles, coupled with the non existent value of the part exchange on such vehicles.

Mike Pilkington, GRS sales and marketing director, said: "Dealers feel much more comfortable buying nearly new sight unseen for obvious reasons. This trend opens up the whole used car market to remarketers using remote techniques.

"That said, our research still indicates a certain wariness about trading over the internet because of lack of personal interaction and the perceived low level of aftersales care."

Plate changes have not helped the cause of older cars, he said, with consumers, for example, seeing an 'S' plate car as 'much older than two years'.

The internet is still not regarded as a primary source of stock. 83% of dealers still like to receive supplier stock information by fax - although 87% have access to the internet.

While 37% said they were 'quite likely' to source vehicles using the internet, 42% claimed to be 'not very likey' or 'not likely at all' to.

Mr Pilkington said: "The market is changing at a rate that none of us who know the industry have ever seen before, and every month, the landscape looks different for dealers, remarketing companies and manufacturers."