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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

By Christopher Crow, chief editor, CAP Many of us will recall the introduction by Ford of their first mainstream diesel-powered car into the UK market in the form of the Ford Sierra 2.3D. At launch it sported less than 70bhp which when compared to today's equivalent, the Mondeo 2.2 TDCi with 197bhp, seems positively pedestrian. The mainstream popularity of diesels languished for many years until the introduction of taxation changes in the UK which incentivised company car drivers to select diesel power over petrol in order to reduce the tax burden and minimise fuel spend. But what about private buyers? Does diesel make sense for them? And with the recent price movements in the relative cost of a gallon of petrol versus diesel, does this change the maths?Private buyers, in the main, focus on the upfront cost of buying a vehicle, but are increasingly focusing on the associated running costs such as insurance and fuel. It has now become a popular mantra that diesel offers higher mpg, but do consumers take into account the difference between the cost of a gallon of petrol compared to the cost of a gallon of diesel? And if they do, are they now considering the growing price advantage of petrol over diesel in many cases? This is an important issue because it changes the 'sell' Does it still make sense to Pump price differences between diesel and petrol are changing thinkingUsed car analysisFor daily automotive news visit www.am-online.com/newsfor the dealer faced with customers whose knowledge has not moved with the times and it also potentially impacts on the relative used values for petrol and diesel cars, if demand patterns are changing.The graph (below left) tracks the pump prices of petrol and diesel over the last two years. In January 2010, the cost of diesel was £1.14 a litre compared to petrol at £1.12 a litre. By January 2012 the cost of diesel had risen to £1.42 a litre compared to petrol at £1.34 a litre. That's an increase in the diesel premium from 2p a litre in 2010 to 8p a litre now. Common sense might suggest that this widening of the gap between petrol and diesel at the pumps would adversely affect the trade price of diesel powered cars relative to petrol. CAP's Used Car Price index tracks the depreciation of used vehicles over time. The index highlights how petrol models have depreciated over the last two years compared to their diesel equivalents. Diesel cars have on the whole depreciated less than their petrol-engine equivalents over the last two years. But does this mean that the old diesel premium is alive and well?We have to drill down to sector level to identify what is really happening and when we look at the city cars sector the pattern is indeed changing. Here diesel cars are not outshining their petrol counterparts, which suggests that the used car buyer has indeed become aware of the advantage of petrol when it comes to the small car. To demonstrate the validity of this view of petrol versus diesel we can look at the running cost comparison of the Fiat 500.The petrol-powered 0.9 TwinAir cost £1,000 less than the diesel equivalent when new in March 2010 and although worth £525 less today as a two-year-old vehicle, that equates to a savings on depreciation of £475. And given the MPG performance of the petrol model and the cost of a gallon, the petrol model also saves the owner money.!1.501.45DieselPetrol1.401.351.301.251.201.151.10Cost per litre (£)Jan 10Feb 10Mar 10Apr 10May 10Jun 10Jul 10Aug 10Sep 10Oct 10Nov 10Dec 10Jan 11Feb 11Mar 11Apr 11May 11Jun 11Jul 11Aug 11Sep 11Oct 11Nov 11Dec 11Jan 12Fuel pump prices