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Glass's predicts continued strength of new and used markets

Forecast advances in consumer expenditure bode well for sales of new and used cars this year, says Glass's; consumer demand is only likely to falter badly once interest rates start to approach 5 per cent.

"As it stands, 2.35 million new car sales in 2004 looks achievable," adds Rushmore. "However, manufacturers and importers will have to become more creative later in the year when trading conditions are likely to become more difficult."

Glass's says dealer optimism has been helped by a 2.5 per cent increase in year-on-year residual values for three-year-old cars last year.

However, it says the boom in sales of sought-after premium models in 2001 will place pressure on three-year residuals during 2004. “This could well translate to residuals falling by at least 2 percentage points when the rest of the market is showing little or no change from 2003," says Rushmore, who adds that used diesels will also fall victim to the same problem of increased supply.

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