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Residual values remain static while Google predicts used car sales

Date: 02 March 2012   |   Author: Jack Carfrae

Conference report: Fleet managers should expect to see residual values for most of their stock remain static, according to David Raistrick, head of UK automotive at tax specialist Deloitte.

Raistrick told VRA Conference delegates that the worst-affected models are older vehicles manufactured at a time when stock was more plentiful, and larger-engined cars.

"We have seen a slow but steady decline over the past three years in terms of what people are prepared to pay for used cars. As you get towards the seven-, eight-, nine-year-old vehicles, there is obviously a much bigger supply and I think we're going to see a drop in RVs for these models.

"RVs overall will be broadly flat. They won't hold up as well in the larger vehicles and I would be nervous about seven-year-old plus stock. For six- to 12-month-old vehicles RVs will either remain stable or drop within the 0-5% range. "

He revealed that values of two- to four-year-old vehicles are likely to see a modest rise, though, while imported vehicles are in for a 3-4% decrease.

Raistrick also showcased research by Deloitte, which revealed that Google search data could be used to accurately analyse the used car market.

The firm's results allowed the company to construct a model showing the link between Google search activity and used car sales in the UK. Its accuracy means that used car sales can now be estimated up to two months in advance before the actual data is released by the SMMT.

Raistrick claimed the greatest concern for fleet managers was the wider economy, which they have no control over: "The biggest issue as far as CFOs are concerned is Europe's sovereign debt crisis. The second biggest one is recession. These are all things that are outside of their control."

He continued to say that reducing costs and increasing cash flow remained the obvious priorities for CFOs.

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