Used car prices are reaching the bottom of the spiral and should stabilise in the first quarter of 2001, says the UK retail motor vehicle industry price 'bible' Glass's Guide.

Editors also expect lower new car prices to stimulate new retail demand with the introduction of the new 'Y' prefix registration plate in March.

However, Glass's warns, competition will be fierce and business will be won on the basis of a combination of low prices allied to generous consumer offers.

"If anything, the deals available on new cars will be better than ever," says chief editor Adrian Rushmore.

The downside is that this could lead to used car values declining still further in April due an influx of part-exchanges as well as an increase in sales to rental fleets.

"Also, a general election will be imminent," says Rushmore. "The weeks leading up to an election will be a low point for used car prices. Any year-on-year gains in residual values to the end of March are likely to be lost over the following two months".

Looking further into the crystal ball at prospects for 2001, Glass's expects a modest post election recovery for used cars with the introduction of a new registration plate numbering system on 1 September.

"The all important age identifier changes from a letter to a 2 digit number commencing '51'. Unlike the apathy towards the millennium '00V' registered car, being one of the first with '51' on your number plate is expected to carry some novelty value and will no doubt impact positively on new car sales," says Rushmore.

Trading conditions for used cars in the final quarter are expected to be no worse than last year.

"The best news we can impart is that used car prices are expected to be less unstable than they have been for the last two and a half years.

"Over this period," says Rushmore, "the year on year devaluation has been around 10% - and for 2001 we are probably looking at half this amount. Whether this is good news or bad depends on whether you perceive your glass to be half empty or half full."

Commenting on recent market trends, Glass's notes that November new car registrations were up 13.4% to 162,572 units, with the surprise that private sales increased by 33.8%, accounting for 44.6% of the market.

Peugeot, Renault, Volkswagen and Fiat fell into line with the other major manufacturers by reducing list prices and the UK market is now operating with a level of list prices that bear some semblance to transacted prices even though in the vast majority of instances the customer has not been able to benefit from cheaper prices.

Nevertheless, a positive buying attitude now prevails in the private sector.

Glass's says that it is rumoured that self-registrations (manufacturers or dealers pre-registering cars) are occurring well in excess of the SMMT monthly published figures. It would appear that some manufacturers have registered more cars for their own use on their management and press fleets.

There have also been instances of new car sales where the supplier has returned unwanted cars by prior arrangement. Whilst these practices do not contravene the Department of Trade and Industry (DTI) order that came into effect on 1st September, they are certainly not in the spirit of the law, Glass's says.

On the used market, activity in the closing weeks of 2000 was both erratic and price driven. For the year as a whole, used car sales volumes were down several percentage points. This was particularly true for sales of late-plate cars, due to the substitution by aggressively marketed new cars.

Condition, specification, provenance, colour and mileage remain vitally important. In particular, mileages over 100,000 are starting to create disposal problems.

Generally, prices held firm throughout November and then started to edge forwards as December progressed.

Furthermore there was a noticeable improvement in diesel prices particularly in the 4x4 and MPV sectors, with cars like the Land Rover Freelander and Ford Galaxy. In the wider market, the Volkswagen Passat and Audi A4 diesels have also seen a revival.

As for six to 10 year old cars, especially those that are old generation, prices have at best held their own, following a steep decline throughout the year.

Glass's says its guide values for December have increased by an average of 2% across all sectors.

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