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What is the rise of the popular SUV and crossover sector doing to values of traditional larger saloon models?

 

The SUV phenomenon has seen the popularity of large saloons and hatches in particular wane.

The Ford Mondeo is the latest victim, with Ford about to end production of the long-running fleet favourite, while the future of other volume models is also under threat, and even premium buyers are shifting to higher-riding cars versus traditional saloons and estates.

“The upper-medium and executive sectors still have their place in the market, even though SUVs and crossovers have in recent years increased significantly in terms of both popularity and choice,” says Vehicle Remarketing Association chair Philip Nothard, who said the dropping new sales of such models could be a benefit in terms of residual values.

“In the used vehicle market, due to the supply shortage and headwinds faced in the new car market, the value of these sectors remains reasonably stable. However, when a shift in demand does occur, they could move significantly. With fewer models, the pricing as a percentage of cost new or true values is appreciating faster than SUV’s.”

According to Cap HPI, the strong rises in all used car values have seen SUVs rise by 26.5% over the past 12 months, compared with 23.0% for executive cars and 23.5% for upper-medium models at three years and 60,000 miles.

The company’s senior valuations editor, Jeremy Yeah, believes that larger traditional models “still hold a firm and popular position within the used car market”, because they “offer great versatility, functionality and still have plenty of room”.

ESTATE OF THE NATION

The more practical estate shape can be the most in-demand of traditional bodystyles, with Cap HPI’s Jeremy Yeah saying they are “generally more popular than saloon variants given the versatility they offer”.

According to Cap HPI, in the upper-medium sector, estates can attract a premium of £800-£1500 versus saloon or hatch styles, a figure that jumps to between £1300 and £2000 for executive models.

“Estates have shifted from being seen as a work or utility vehicle to a lifestyle choice,” adds the VRA’s Philip Nothard. “Performance models available across the range, particularly in the premium sectors, can command very positive used values if the specification and colour combination are correctly chosen.”

FUEL FOR THOUGHT

The recent fuel shortages are one of a number of things helping boost the case for alternative-fuel upper-medium and executive models, versus their petrol or diesel counterparts.

“Historically, alternative-fuelled vehicles have not translated well into the used car market due to not receiving the same benefits as a company car driver, however, more recently used consumer demand for these eco-friendly vehicles is going from strength to strength,” said Cap HPI senior values editor Chris Plumb.

“We see strong performance of vehicles aged between three and five years old, mainly due to the lower price points when compared with nearly new vehicles.”

He said high prices for petrol and diesel, combined with the September fuel shortages have had a positive impact on the demand for EVs, and recent increases in value are against a backdrop of increased used supply.

CONDUCTING THE MARKET

BCA COO UK Remarketing Stuart Pearson on the state of saloons and estates in the market

 

Stuart-Pearson - MD - BCA UK Remarketing

Stuart Pearson – BCA UK COO Remarketing

 1. Demand still strong for diesels.

 

Demand for diesel in the used sector remains strong and, for many used car buyers, diesel is the preferred choice of fuel type as it offers great economy and typically lower running costs. Professional buyers at BCA are bidding strongly across the range of vehicles on offer with age, condition, specification and mileage continuing to be the overriding price factors. Buyers expect to see examples of premium and executive hatchbacks, saloons and estates presented in top condition, in a good colour and with a decent specification.

2.Premium estates doing the job

The premium estate fills a distinct niche for the used car buyer that needs the load capacity and likes the brand, but doesn’t necessarily need an SUV.  

 

3. Mainstream estates facing more competition.

Volume models face competition from similarly valued MPVs and SUVs, which can deliver equivalent load-carrying capabilities. Clean, well-specified examples will find a ready audience, although entry-level models need to be sensibly valued to generate interest.

4. PHEV popularity on the rise.

Plug-in hybrids are becoming more popular with used buyers, because they offer cheap electric-only power for short trips, yet longer journeys are free from range anxiety thanks to their petrol or diesel engines.

5. New car supply leads to used value strength.

The current dynamics seen in the used vehicle sector are very much amplified by challenges around new car supply. Both the franchised and independent dealer sectors remain active in the wholesale market and bidding is competitive across the board. The market is seeing demand for newer, retail-ready stock and, as always, the best presented, best specified vehicles attract the strongest bidding.