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Manheim Auctions pricing issues: Residuals converge on older cars

Our recent Manheim Market Analysis Used Car report showed that dealers were better at turning used cars into cash than any other industry sector.

In the first quarter of 2005, dealers continue to follow their aggressive liquidation policy, reducing stock turn from an already impressive five days to just over four: considerably ahead of manufacturer or fleet/lease vendors.

But when it came to part exchanges on older cars between four and 10 years old, used value predictions can get a little hazy. Manheim analysed 175,000 part exchange cars sold through its network.

The findings were intriguing, even for the most experienced used car manager. At 4-5 years, the cars retaining most value were the BMW 3-Series and Mercedes C-class (37% of cost new) and the VW Golf (36%). At the bottom end of the scale, worth less than 20% of their original cost, were the Nissan Primera and Renault Laguna.

Large family cars lost nearly 4⁄5ths of their original cost new in the first four years, dropping to just 3% at 10 years of age. Executive cars held up well over their 10-year life in terms of a percentage of original value retained, actually performing at 1-2% points ahead of the supermini and small hatchback sectors.

Who would have thought that at 6-7 years and upwards, superminis, small hatches, medium and large family cars were all worth within £250 of each other, and who would have guessed the vehicle consistently retaining the highest value across the 10-year life of all vehicles analysed was the Land Rover Discovery at 17% of cost new?

It just goes to show that everyone has an individual view of what cars are worth, including the used car guides and auction companies. But it’s not until you analyse the market in this level of detail that you get close to reaching used car nirvana.

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