LONDON: A new Eurotax Residual Price Index released today (23/11/00) by eurocarprice.com
highlights that residual prices of two-year-old vehicles are dropping in many
European countries.

Values have fallen by an average of 2.5% over the past six months with the
largest drops in the UK (-9.3%, linked to recent new car price cuts) and Belgium
(-4.9%). France, Austria and Switzerland have, however, seen small rises in
residuals.

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The latest index also shows the continuing wide variation in residual prices
across Europe. The average residual value as a percentage of a two-year-old
car’s new price ranges from 56% in the Netherlands through 66% in Germany to
as high as 71% in markets such as Portugal, Poland and Czechoslovakia.

"This variation has great strategic importance for the automotive finance
and leasing industry, where any harmonisation of residual values would have
far-reaching consequences," the eurocarprice.com index authors note.

The reduction in residual values affects all market segments but the largest
falls are in the executive and sports coupe segments.

"The continuing effects of the high levels of new car registrations right
across Europe are bringing unprecedented numbers of used cars on to the market,"
said Roger Dal Santo, international sales and marketing director for Eurotax.

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"The reduction in residual values is a clear sign that the demand for
used cars is failing to keep pace with the demand for new cars which is resulting
in higher used car stocks at dealers.

"In the UK, falling new car prices are having a dramatic effect on residuals
[and] we see the overall downward trend continuing."