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REMARKETING: Premium-badge brands enjoying second-hand surge in demand

Date: 23 November 2010

With the volume of prestige vehicles on the rise, Rachel Burgess discovers how the increase in numbers affects the desirability and value of cars in that sector

Prestige product is hugely aspirational and a popular choice with fleets and user-choosers, who will often squeeze every last penny out of their allowance to get a premium badge on the bonnet of their company car, according to BCA UK operations director Simon Henstock.

This means there are good supplies of used models hitting the market between three and five years old, "which is just as well because demand is huge", says Henstock.

There appears to be demand across the board in the luxury sector, as Henstock explains: "At the very top end, a dozen vehicles have hit six-figure sums at BCA in 2010, with twice that number making £90,000 or more. The value of BCA's Top 50 sellers combined is a massive £5.28 million, averaging more than £100,000 a car.

"Even away from the stratospheric end of the market, there is a general trend for prestige-badged cars to sell strongly. BCA recently sold two 2008-registered BMW X6 35i XDrive Steptronic models for nearly twice the guide price in a BMW open sale in Edinburgh," says Henstock. "The cars had admittedly comprehensive specification packages, but had covered nearly 20,000 miles apiece, and CAP suggested a value of around £30,000 on each car. The first sold for £58,000, equivalent to 195% of CAP Clean, with the second model achieving £58,500 (192.1% of CAP Clean)."

However, Leasedrive Velo commercial director Roddy Graham says smaller prestige cars such as the Audi A4 and BMW 3-series have dropped in value in the past few years due to increasing numbers in the marketplace. "But lower-end prestige cars still demand higher prices when accompanied with desirable spec and colour," adds Graham. "Higher-end cars such as the BMW 5-series and Merc E-class are again driven by colour and specification combinations. Cars such as the Audi A5, Jaguar XF, Audi Q5 and Range Rover all command higher premiums due to shortage of stock."

BCA's Henstock says the prestige market has been particularly strong this year: "If 2010 has been typified by a return to a more typical pattern in used car trading, then the prestige sector has arguably seen some of the strongest demand.

"Our Top Car sales have enjoyed some excellent results for such sellers as BMW Group, Bentley Financial Services, Alphabet GB, Lex Autolease, Black Horse and Leaseplan, and often spectacular values are achieved for marques such as Aston Martin, Bentley, Ferrari, Rolls Royce, Lamborghini, BMW, Lotus, Range Rover, Maserati, Mercedes, Audi and Porsche."

He adds: "There has been a great deal of interest in these 'top end' cars all year with plenty of buyers prepared to bid some very serious sums of money to acquire them. It is quite possible that end-of-financial-year bonuses fuelled the demand for some of these high-value prestige, sporting and executive models. Even seriously rich people like to save money and buying a used Bentley or Ferrari would save many thousands of pounds. Once you put a private plate on the car, no one need know it is not this year's model. The export market has also been a factor as the Euro has been relatively strong against the Pound for some time."

Graham says that due to the lack of volumes of prestige products in the physical marketplace "we aren't experiencing large fluctuations in price compared with mainstream product". "All the time there is a shortage of stock we see prices being stable for 2011. Albeit this is dependent on the wider macro environment, such as taxation, fuel costs and employment levels," he concludes.

Henstock advises that buyers acquiring cars for their fleet go for the best spec and the nicest colour they can afford. "This will repay itself by making the car more saleable the next time you change the car, plus it will please the driver no end. Avoid flat colours and low-spec cars just to save a bit of money - it could make the car difficult to move on in three years'­ time.

"When it comes to specification, buyers look for the best - leather is a must, as is climate control - preferably with individual settings, alloy wheels, a good CD/radio, heated memory seats, cruise control and a high degree of safety features, such as ESP and all-around airbags. Satellite navigation is almost universal these days and MP3 and Bluetooth compatibility is increasingly expected in newer models."