Assessing changing rates of depreciation over the last quarter (July-September 2004), the Index reports that the typical used car lost £713 in its trade value over the period, representing a fall of 9.7%.
Glass’s has predicted that residual values will not crash, but they will almost certainly fall at an increased pace over the coming months. This is largely due to recent interest rate rises, a slowdown in house price inflation, growing used car availability, as well as the standard seasonal slowdown in vehicle purchases.
"It should be made clear that the extra cost of servicing a £100,000 mortgage almost equates to the monthly payments on a three-year old family car," says Alan Cole, editorial consultant at Glass’s. "As a result, retail demand has weakened and is unlikely to recover in the run up to Christmas."
Glass’s says values of three-year old cars on a Y-plate have been further depressed by the introduction of the new registration system in September 2001. "The effect has been to prematurely age cars bearing the older plate scheme in the eyes of both the retail and trade buyer," explains Cole. "Consequently, the monetary gap between the 2001-Y and the 2001-‘51 plates has widened."
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