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CAP begins comprehensive re-valuation for used market

For the first time in its history, CAP has begun a full market re-forecast for used vehicle values covering all model ranges in one exercise.

CAP said that residual values will continue to fall until at least early summer 2009 as the recession bites and VED changes hit polluting vehicles.

The news means that dealers must keep focus on their used car stocking policy and part exchanges must be valued or underwritten with extreme care.

The latest issue of CAP Monitor already partially reflects the impact of the re-forecasting, with 4x4s and other 'heavy' vehicles suffering from a "significant downward revision of forecasts at the three-year/60,000 benchmark".

CAP's Mark Norman said: "All evidence currently suggests that the bulk of significant adjustments will be focused on larger-engine vehicles as market sentiment continues to favour smaller, more economical cars.

"Future residual value forecasts for the latter are therefore little changed, or stable at present. Other sectors, which will be significantly impacted are upper-medium and large executive."

The re-forecasting process will continue until December, although CAP cannot rule out that the process will not continue beyond then.

Rival EurotaxGlass's, published of Glass’s Guide, has said there are grounds for cautious optimism about sales of new and used cars in 2009.

Its managing editor Adrian Rushmore said the used car market is likely to be the first to recover from today's lows, followed by a steady - albeit modest - upturn in retail sales of new cars.

Residual values have been hit by a trio of knocks that have seen millions of pounds un-expectantly wiped off the value of used cars over the past few months.

The government’s decision to alter the road tax system has made consumers shy away from larger-engined used cars, while the lenders' unwillingness to provide used car buyers with credit has significantly reduced the number of customers in the market.

However, the biggest factor has been the shadow of a recession, which has seen the few buyers still out there opt either not to buy at all or to chose a smaller, cheaper used car.

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