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CAP Trade Watch: When big is no longer beautiful

Factsheet

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Review

The current market downturn is one of the most significant market adjustments for many years.

Commentators are lining up to push back expectations of recovery.

Some are now warning that conditions will not improve until 2010.

To illustrate the speed of the decline this year we need look no further than used car values.

Taking the 12 months between September 2006 and August 2007, values were generally stable, at three years/60,000 miles, showing a 0.1% reduction overall.

Contrast this with September 2007 to August this year when the cumulative reduction has been 18.3%.

To put the situation into a more stark perspective, take a benchmark family car and compare the trade values of equivalent models today and 10 years ago.

In July 1998 a three-year-old 95M Ford Mondeo 1.8 LX 5dr hatch, with 60,000 miles, booked CAP Clean at £4,575 one month ahead of the plate change.

This month, also just ahead of a plate change, the equivalent model on an 05 plate is valued at £3,675.

Nor do such figures take account of inflation, so the picture is indeed gloomy.

Research is unearthing reports of dealers making unacceptable offers in a proactive bid not to own large heavy vehicles when customers wish to part exchange.

An experience of someone connected with CAP sums up dealers’ caution.

He took his very clean, well-specified Mercedes M-Class with a view to exchanging for a C-Class and the dealer politely turned him down.

In the case of heavy, big-engine vehicles it is increasingly common for dealers to refuse them, having taken several big hits already this year.

There is, perhaps, a silver lining here.

There is also evidence that some customers who are already in a large 4x4, and prepared to accept the ongoing fuel bills, are increasingly prepared to ‘upgrade’ to something even thirstier in light of the bargains to be had.

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