The current used car market continues to defy the industry’s expectations.

Historically, the March plate has seen average three-year-old values in the CAP Black Book rise by a mean 3.2%, as an average 4% rise for the change in plate coincided with an average -0.8% drop in underlying values.

This year, however, March three-year/60k values rose by an unprecedented 8.3%, as strong disposals contributed an additional underlying 3.3% increase in trade values, as well as inflating the gap between the 2006 06 plate and 2006 55, as traders paid an increased premium to obtain the first of the 06 de-fleets.

Previous seasonal trends would not have suggested that these movements would be repeated, let alone exceeded, the following month.

It is perhaps the best indication that the market could be self-correcting following last year’s levels of residual value depreciation.

April’s Black Book saw three-year-old values rise by a mean 6.8%, the largest average movement ever seen.

This movement is more than 8% above the seasonal norm, when considered in light of previous April Book movements, which averaged -1.6% over the past four years
When broken down by sector, the level of self-correction becomes more evident.

Those sectors that experienced the most depreciation last year, such as 4x4s and small and large executives are recovering the most.

Benefiting least

Conversely, sectors where residuals held relatively firm last year, such as city cars and superminis, are now benefiting least from the upturn.

It is the continuing over-performance at disposal that is strengthening values. It was almost exactly a year ago that CAP’s measure of three-year-old disposals began to deteriorate significantly and residuals plummeted.

This trend has reversed with January three-year-old transactions averaging 100.8%, before rising to 103.8% in February, and the recent peak of 106.5% for March sales.

Average increases in value this month of more than 7% for both large and small executive models are an indication as to how much these models lost last year.

This decade has seen these sectors and the related manufacturers representing an increasing share of the market as changing buyer and fleet patterns reshaped the UK car parc.

Historically strong future residuals, particularly of the German brands, have meant this sector increasingly found its way onto fleet, leasing and user-chooser lists.

Changing fashion and perceptions have helped drive the relative fortunes of these manufacturers; where once a 40-something executive buyer may have opted for a Jaguar, Audi and BMW’s increasingly current design languages and extensive derivative mixes have helped make these marques the primary choice.

Their move into smaller sectors with models such as the A3 and 1 Series have also helped their brand reach a greater mix of private buyer.

The three year-old executive models performing particularly well into April included those models not normally considered sector-leaders.

Volvo S60 values increase by £600-£900, depending on derivative, and Saab 9-5 values increased by an average 10%, as did the diesel Jaguar S-Type.

Whether the market will continue in this vein is very doubtful.

Yes, the market is shifting from new to used, with March registrations, at the time of writing forecast to be down 30% on last year.

Much of the market’s future lies in the manufacturers’ hands.

Large levels of unsold nearly new cars remain stored around the country and how these are released could have a huge impact.