AM Online

Parker's forecourt focus: Thirsty cars feel the pinch

There was a great deal reported in the aftermath of the Budget about significantly greater depreciation expected in the used car market this year.

Whether it was intended to coincide with the start of the £400 top rate of road tax for high-emission cars registered in the last two years or not, media outlets were happy to present them as cause and effect.

However, the changes to Vehicle Excise Duty announced for next year will have little to do with how the used car market is performing now.

We’ve noticed a general trend towards higher depreciation for several years, thanks in part to the sheer number of used cars on the roads.

Perhaps the greatest increase in depreciation suffered in recent times is down to the increasing cost of fuel and this is affecting thirsty petrol cars.

For example, a three-year-old BMW X5 4.4i V8 on a 2000/W-plate would have been worth about £34,000 in 2003.

A three-year-old X5 V8 on a 2005/05-plate now is worth about £10,000 less.

True, that generation X5 has been superseded by an all-new model, and the number of 4x4s to choose on the used market has grown significantly.

But it does not disguise the fact that even cars that were a sure bet for slow depreciation only a few years ago have been hurt by the spiralling cost of fuel.

At the other end of the scale, with a growing number of incentives on economical small cars and the latest generation of frugal diesel family cars, these vehicles could demonstrate the greatest stability of pricing over the next few years.

With likely changes in the London congestion charging zone coming into effect later this year and the incentives of lower road tax for the lowest-emitting vehicles in future, smaller, cleaner cars will become more desirable for consumers than ever.

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