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Used car market set to stabilise in 2006

The used car market is expected to stabilise during 2006, according to industry analyst CAP Monitor.

This is because the new car market is likely to be more orderly, with a limit to available discounts.

By the end of 2006, reductions in the price differential between diesel and petrol models will have narrowed because of the increased volume of DERV cars being produced. This will not adversely affect the values of fleets.

There will be only a few significant new fleet cars introduced in the next 12 months, with 2007 forecast as the next ‘big’ year for fleet growth due to new models of cars such as the Audi A3, revised BMW 5-series and Honda Accord, CAP claims.

Any increase in disposable income is forecast to be neutralised through credit repayment because of higher interest rates.

Major events expected to severely disrupt the markets include the FIFA World Cup in June and July. If England does well, residuals are likely to fall as buyers concentrate on the team’s progress.

But van sales predicted to fall

Sales of used vans are likely to fall in the first quarter of 2006, as dealers are urged to adopt realistic pricing for growing numbers of larger used vans entering the market.

EurotaxGlass’s says that sales patterns for new vans have shifted sharply in favour of larger models.

George Alexander, chief commercial vehicle editor at EurotaxGlass’s, said: "The problems start when vendors have unrealistically high expectations of the residual value performance of such vehicles aged 18 to 30-months-old.

"With many more identical vans to follow during 2006, the market will struggle to soak up the growing volume of used stock."

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