Used car values will drop by 3-5% in 2016 and onwards according to BusinessCar data provider KeeResources.

MD Denis Keenan said: “We have to consider overall employment statistics, which have actually improved, probably against the odds, and then factor in that public sector employment simply must shrink if we are to return to any degree of national book-balancing.”

The latest 2013 UK GDP growth projections could point to annual growth of just 1% with even more concern for 2016 and 2017.

Inflation itself is generally forecast to average around 2% per annum over this time, with real concerns over consumer confidence during this period.

As a result, the firm expects to see a 3-5% decrease in used values, sector and type dependent, excluding new car volume increases, which Keenan described as “the real elephant in the room”.

“While the possibility exists of the UK being used even more as a dumping ground at a time when the EU new car sales market is at an all-time low, we believe the more stable manufacturers, understanding the longer term damage of such actions, will be reluctant to do much to de-stabilise the overall new car volume.

“Some, however, may seize the opportunity in the run up to plant closures within the EU to squeeze some final volumes out of these assets before closure, and this uncertainty remains our current biggest concern.”

The SMMT’s 2013 forecast is around two million units while the forecast for 2014 is slightly higher at approximately 2.1 million.

“These numbers suggest a relatively stable used car market, but even an extra 5% lift to 2.2 million units could harm three and four-year RVs by up to 6-8%,” concluded Keenan.

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