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CAP trade watch: Older variants are feeling pressure

With the first quarter of 2004 over, it's a good time to review some features of the used market. As the Black Book Marketplace report for May shows, trade values slipped under the influence of factors like reluctance among dealers to buy large numbers for stock, based on experience of previously quiet post-March conditions. But, since the start of the year, values have done well and the dip into May does not necessarily suggest a trend that will be maintained.

To identify the dynamic behind the values of key used models we looked at Ford Focus, Vauxhall Astra and Volks -wagen Golf between January and May, showing percentage and pound value movements month-on-month. The vehicles chosen are three years old, with 60,000 miles and what is immediately identifiable is the uplift in values as a three-year-old car moves from 01X to 01Y between February and March.

This is followed by the fall into May which brings values closer to January levels once again. This points the way toward further research into plate premiums to determine their trend over time.

Questions this could address include: how do the March and September plate premiums compare, are they consistent year-on-year and how does the premium alter over time? Identifying, for example, a regular adjustment in May would be valuable.

Another factor of interest is the impact of new model premiums and the pricing relationship between old and new models. Take the Ford Mondeo 00 and Renault Laguna 01 models and the percentage premiums over the previous car. Current model Mondeo commands a premium of 20 to 28% over the older one and this appears to have strengthened over the last 12 months.

Therefore, despite a higher than average fall in May, the latest Mondeo continues to widen the gap with its predecessor. In June 2003 the gap was 20.9%. Now it has grown to 28.8%. According to our research, supply levels of the latest Mondeo have grown by 11% compared to a year ago, which inevitably causes some downward pressure on values. However, the significant factor in these figures is the evidence that the rate of depreciation is exacerbated for the previous variant. We find a similar phenomenon in relation to Renault Laguna. In June 2003, a Laguna 1.8 16v Dynamique 5dr, on an 01Y, at 60,000 miles, was worth £6,200 – £1,400 more than the old version with the same plate and mileage. Today the gap has widened to £1,575, representing a premium uplift for the current model of 30.3%. This reveals how the impact of downward pressure on pricing is more keenly felt by older variants than their replacements.

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