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Cap forecasts the return of residual value stability

Residual value stability is in sight in the used car market after more than two years of collapsing vehicle values, with some sectors experiencing price increases. The claim comes from Cap Network using evidence from various sources, including Glass's Information Services, British Car Auctions and Manheim Europe that the long spell of tumbling residual values is over.

Evidence first emerged that residual values were rising five weeks ago when Lex Vehicle Leasing revealed that average secondhand values on its fleet had increased 0.5% in the past year, compared to falls of more than 10% last year, based on Cap Research.

Cap Index reported in its new and used car prices monitor that the rate of residual value decline was 'almost negligible' in April and, in some sectors prices had increased.

The biggest gains came in the lower medium sector where values have increased a further 2.8% this month following a 3.1% rise in March.

Executive cars (up 0.2%) and 4x4s (up 0.7%), sectors which saw some of the heaviest falls last year, also saw slight rises. However, sports cars (down 9.3% year-on-year) and upper medium sector cars (down 8.7%) continued to plummet.

Cap senior economist Ramesh Notra said: "These price rises reflect a better level of confidence this year among purchasers and dealers alike, following the long-running new car pricing row of last year.

"The rate of decline improved slightly in April from 1.3% to 0.6% year-on-year, showing the market is now almost stable. Values still fell sharply in the upper medium, sports and MPV sectors reflecting the continuing trend against vehicles with higher running costs."

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