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Price falls past their worst – CAP

With the market now in the traditionally slow period there is a sense that the true nature of the downturn is masked.

CAP’s view remains that the steep nature of monthly price drops is past the worst.

That will be cold comfort to dealers who can only now dig in and wait to see what the New Year brings.

In the meantime, the familiar pattern remains whereby small, economical cars are still in relatively high demand and offer the least risk for stocking.

Unfortunately, despite the relatively strong economic and value for money credentials of family cars in the C sector, values here are not as robust due to continuing high volume.

Of course, the market for larger vehicles remains severely limited.

Although the pain suffered in the off-road market has been well chronicled this year, recent analysis by CAP reveals that not all 4x4s are equal in terms of performance.

Annual depreciation shows wide variations.

According to Black Book, the most robust performance in the year to November came from the Suzuki Jimny 1.3 O2 3dr, which saw depreciation of 16.3%.

At the other end of the scale, however, three old model Kia Sorentos all lost more than half their value.

Honda CRV (99-05) range turned in a respectable performance with 17.8% drop.

The sector’s fate is summed up with an overall average depreciation figure of 34.8%.

In looking forward to and beyond the recession CAP now believes that, despite the inevitable casualties, the convergence of factors encouraging the take-up of low CO2 vehicles may actually prove healthy in the long term for the used car market.

Because the contract hire sector is the main source of used car supply, it has always been one of the industry paradoxes that the cars it feeds back are those which tend to be least desired in the used market.

This was not such a problem during the credit-fuelled boom years, but now that buyers are looking more for manageable running costs and less for image and luxury this has led to the weakest large car values in many people’s memory.

When government taxation changes to capital write-down allowances kick in, we will begin to see fleets made up of cars which more closely match the preferences of the used car buyer.

For those who can survive the current storm, this indicates a smoother future in the years to come.

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