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CAP trade watch: A good year could get even better

These are good times for the used car market. According to the newly established CAP Used Car Performance Index, not only did dealers enjoy better results last year than in 2002, the vast majority expect even better retail sales performance this year.

The CAP UCPI is a valuable barometer of the market because it is based on a statistically valid sample, weighted by region. Based on a mix of franchise and independent used car dealers the first of what will be monthly surveys concentrated on reports of retail sales performance in 2003 and expectations for 2004 as a whole. From this point, attention will switch to month-on-month performance, from which the really interesting results will emerge.

Looking at the headline results of the first survey, 63% of dealers reported improved performance last year, with 17% experiencing a decline. Looking forward to the rest of 2004, however, dealers were overwhelmingly confident of success, with just 12% expecting reduced retail sales.

This confidence is so far justified with retail interest showing a steady increase in January. Always an interesting feature of the market is perception of colour and the difference in the value of cars in 'good' as opposed to 'poor' colours. Not for nothing does the old joke about certain car buyers simply wanting 'a red one' still endure. Last year we took a snapshot of our own research database, detailing hundreds of thousands of actual transactions. Mileage and colour were the dominant factors identified on that occasion.

And, interestingly, where an unfavourable mileage and popular colour – like silver – were present on the same vehicle, colour would win the day. In other words, a high mileage car in a good colour achieved higher returns than a low mileage car in an unpopular colour.

Flat 'doom' blue and '60-day white' are still the kiss of death for a car's value. Non-metallics are losers, while silver is the most popular choice.

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