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Part exchange market 'cools'

Values of dealer part exchanges in May showed signs of easing back as the strong market, seen in the first quarter of 2007, continues to harden.

Manheim’s market bulletin reports that volumes were up on the previous month by around 10% but, despite this, the price reduction was limited to an average of £50.

There was little change in the age and mileage profile of these older trade-ins at 88 months and 71,000 miles respectively. But reflecting the additional volumes in the auction halls, the average days in stock went up by one day to five days. No change in the proportion of original cost new was seen which remained at an average of 16%.

Not surprisingly the biggest share of dealer part exchanges were petrol models representing 83% of the total stock and these saw an average reduction of £61 at 90 months old and 67,000 miles.

Faring slightly better were diesel cars which only dropped by £40, albeit 12 months younger on average at 78 months but with nearly 20,000 more miles at 87,000.

The mix of cars coming in part-exchange remained fairly stable with executive, MPV and 4x4 models all under 5% share, the biggest chunks being medium family and small hatchback models taking 31% and 27% of the mix respectively.

A notable contrast in the fortunes of the vehicle segments was the difference in price retention against original cost new between the top and bottom performers.

With both segments seeing similarities in age and mileage the gap between compact executives coming in at 20% (at 86 months/82,000 miles) and Large Family models at 10% (89 months/88,000 miles) was pronounced.

A spokesperson for Manheim said: “We’ve been in a really strong market for the last nine months. With none of the traditional dip in values seen at the back end of last year and a further rise in the market in the first quarter of 2007, it’s no surprise to see things beginning to cool down a bit.

"This adjustment was expected and if anything it’s probably less than anticipated which suggests that the market may still ease back further.”

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