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expensive compared to a wide basket of goods and services. However, as usual, data does not necessarily relay the complete story.Premium footholdIt is important to note that values represent the three-year vehicle parc at each year, but the composition of parc changes with time. Over the 11-year period, the premium brand manufacturers have established a greater foot­hold across the board and there has also been a greater penetration of diesels, and this is indicative for most manufacturers whether they are defined as premium or not. Not only does this change the mix of three-year-old supply but, more importantly, this mix is of an intrinsic greater value. This is because the current crop of three-year- old premium brand cars and diesels would have had a much higher original cost new than those cars that would have been purchased new 11 years earlier, i.e. non-premium brands and petrol models. Perhaps of more interest and relevance is to understand what has been happening in the near past. By comparison to previous years, the year-on-year changes from 2009 have shown steady increases (figures extracted from earlier chart and shown below).Before we draw any conclusions it is also impor­tant to understand if the parc of three-year-old cars has changed significantly. This can be done by looking at the change in list prices of these three-year-old cars when they were new, and by looking at the types of car that were represented in each of these years.What the above list price analysis shows is that the composition of the car parc over the period, measured by their prices when new, only increased by 2.7% and 1.3% respectively. Further­more, for each of the three years, residual values, measured as a percentage of the original list price, remained constant at 44%. The types of three-year-old car available to the market did not change significantly, although the content of lifestyle 4x4s and city cars was slightly greater, there were slightly fewer upper medium family cars present, and the premium brands continued their relentless progress.What we conclude is that if the three-year-old Dec 09 Dec 10 Dec 11Values for 3 yr old - whole market £7,775 £7,825 £8,000% increase 0.6% 2.2% £ increase £50 £175Changes in residual values from 2009Used car analysiscontinues Dec 09 Dec 10 Dec 11Values for 3-yr-old - whole market £7,775 £7,825 £8,000Original list price for 3-y- old £17,475 £19,950 £18,175% increase 2.7% 1.3%% residual value 44% 44% 44%Changes in list prices for three -year-old cars

Dec 09 Dec 10 Dec 11Values for 3-yr-old - whole market £7,775 £7,825 £8,000% market increase 0.6% 2.6%CPI increase 3.3% 4.8%Values if matched to CPI base year x 3.3% = x 4.8% = £,7,775 £8,025 £8,400CPI and used car prices comparedproduct was reasonably constant in terms of mix and intrinsic value, the only influences on price were supply and demand. Much has already been said on these pages about the reducing supply being a result of lower new car registra-tions in recent years, and how the retail demand has been held back by the general economic climate. The important thing to state is that stable values have largely been held in check by these two forces. On the question of affordability, we need to return to the matter of price inflation for all other goods and services. If we rebased the start of CPI at December 2009 - i.e. the beginning of the period of more stable prices - we can see what would happen if car prices matched CPI during the latest period compared to what actually happened to prices (see below). The headline here is that if the values for three-year-old cars had matched inflation (CPI) from December 2009, the market norm would be £8,400, £400 higher than where values actually are. This would prove that three year old cars represent better value for money than they did in December 2009.So far this analysis has only looked at trade values and we need to consider if the gap between trade and retail prices has changed since December 2009. Empirical evidence is difficult to find, but our view is that this margin is likely to be very similar, meaning that dealers have absorbed the inflationary elements associated with the costs of sale. We therefore conclude that retail customers are currently getting better value for money, also to the tune of around £400, compared to December 2009.While the capital costs of a used car may be more favourable, we can't ignore the changes in prices for other motoring costs. Private motor insurance premiums increased by around 12% between 2009 and 2010, and by a further 9% in the first three quarters of 2011. Average petrol prices in December 2009 were 108 pence per litre, but had risen to almost 134ppl by November 2011 (Source AA). This is a rise of 24%. Of course, many consumers have wisely chosen to offset these rising costs with their next choice of car.The positive message for dealers is that used cars have increasingly represented good value for money during the past two years when compared to the rising costs of other goods and services. Of equal importance is the fact that motorists can benefit from attractive prices while choosing a car that allows them to reduce their motoring costs. Lastly, specifications have improved markedly and, even if consumers downsize or down price, they may not need to compromise on those features they consider important.New car marketNewsDealerprofileNew carnewsUsed carRecruitmentanalysisNewsdigestShowroom