September will see the introduction of a new registration system with the format 'YA51 ABC'. The first two letters are regional identifiers, the numbers are age identifiers and the last three letters are chosen at random.
Since March 1999 there has been a transitional system that includes elements of both the old and new systems. The timing of plate changes (March and September) is identical to the new system. They have already had a significant impact on the used car market.
Under the old system, premiums of up to £1,000 for the newest plate in the used market would persist for several months, whereas now these premiums are much smaller and decline in a matter of weeks. As Cap Monitor predicted, the result was a narrowing of plate premiums following the introduction of the new system two years ago.
Also, as a result of these changes, the used market now suffers from greater seasonal instability with more peaks and troughs in the pattern of demand. Of particular concern to the motor trade is the fact that the traditional springtime upturn is now disrupted by the March plate change, when a large influx of part-exchanges on to the used market depresses values.
This, in turn, causes the trade to place even greater emphasis on a good start to the year in January, reinforcing the seasonal instability. With a residuals low point in December, this clearly carries risks if the upturn fails to materialise.
Seasonal instability will be exacerbated this year as there is an increased likelihood that anyone considering buying a new car in July or August will delay their purchase until September. Company car drivers may also try to delay renewal of their lease so that the replacement car has a new format plate. Many retail buyers will simply be confused by the system, and further changes will make it seem even more opaque from the buyer's perspective.
There is also a threat to today's new cars coming on to the second-hand market shortly after the new system in introduced. Because the registration plate will be so different, these vehicles will lose some appeal against the novelty value of the new plate, which will affect resale values.
In the longer term, residual value trends under the regime starting in September are forecast to be similar to that under the current system. This is because the only significant change is that the age identifier is numeric rather than letter-based.
Although the introduction of the new system will cause plate recognition problems initially, the seasonal trend under two-plate changes is already established in the marketplace.
Late-plate premiums will remain smaller than under the old August prefix and there will be continued emphasis on January for improvements in residuals.