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Residuals strengthen as confidence returns

Data from three residual pricing guides suggests that the UK used car market is beginning to recover after a torrid few years.

The latest Cap Index reveals residual values rose last month for the first time in three years, following market buoyancy.

Ramesh Notra, Cap economics editor, said: “Retail demand has made a comeback this year and most dealers have been reporting strong trading conditions, both in the showrooms and at auction as they compete to buy stock.

“The result is that overall used values have now risen for the first time since 1998.”

Upper medium cars, sportscars and MPVs continue to struggle, although the rate of year-on-year decline has slowed.

EurotaxGlass's residual price index showed a 12-month drop in values of 1.9%, but a 4.8% rise over the first three months of 2001.

Paul Jarvis, Glass's Information Services managing director, said: “We have seen a dramatic recovery in the used car market since the beginning of the year, and it is clear that there was considerable pent-up demand resulting from the inquiry into new car prices and the ensuing price changes.

“This demand is only now being released.” Mr Jarvis believes that while seasonal price adjustments will continue, they will not be as severe as recent years. The European Car Pricing Review, which assesses two-year-old cars, shows that values across Europe are down by 0.6% year-on-year, but have increased by 0.7% in the last quarter (4.8% in the UK).

However, it warns that falling new car prices could reduce hopes for a long-term residual recovery.

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