UK sales of many luxury saloons like the BMW 7 series, Mercedes S class, Jaguar XJ etc) have fallen back or remained static, losing out to large prestige 4×4 SUVs (e.g. BMW X5, Volvo XC90) and large prestige saloons (e.g. BMW 5 series, Mercedes E class) according to valuation company Glass’s.

A spokesman said the launch of several new luxury models, the widespread availability of discounts and incentives, and more new diesel options have prevented further significant falls in registrations, but this still counts as a poor performance against a backdrop of record year-on-year sales across the UK car market.

Falling demand has led to steady reductions in luxury car values over recent years, to the point where they now represent excellent value for money on the used market, particularly for those willing to buy a petrol model. It now costs no more to buy a new diesel luxury car than a similarly-powerful petrol equivalent, but the value of the former as a used car is at least £1,000 more after one year. The residual value benefit remains at similar levels for two- and three-year-old examples. For the braver second-hand buyer, this means some of the large petrol engines now offer a lot of car for the money.

The real luxury petrol bargains apply to those models that feature larger engines, as the price premium charged for new versions erodes rapidly on the used market. For example, a new Mercedes S500 costs £11,950 more than an S320, but after 12 months and 12,000 miles that premium falls to £4,650.

Approximately 55% of Mercedes S class sales are now of diesel-powered versions, up from 35% two years ago. Audi and BMW have only recently introduced diesel variants, but they too have seen sales jump, with BMW now selling 43% with diesel power.

This shift towards diesel is unlikely to fade anytime soon, although the popularity of diesel luxury cars will continue to take sales from petrol equivalents, rather than from other vehicle sectors.

Downsizing has become prevalent in the UK car industry over the past decade and many of those able to invest in a large luxury car have opted instead for ‘lifestyle-oriented’ alternatives, or models that are cheaper to run.

The traditional luxury car is expected to continue falling in popularity and values will continue to ease, though more gently than of late.