Gas guzzler' budget penalties will not lead to used 4x4 prices meltdown

As 4x4 owners braced themselves for Gordon Brown’s anticipated ‘anti gas guzzler’ budget, CAP revealed they are already suffering worse depreciation than owners of most other car types.

According to CAP, publishers of the industry standard Black Book used car price guide, the first quarter of 2007 saw 4x4s and other large luxury cars bucking a generally rising market trend and decreasing in value compared with the same period last year.

While secondhand prices in the overall market have been generally rising year on year in comparison to the first quarter of 2006, the first three months of this year have seen 4x4s typically worth an average 9.1 per cent less than they were a year ago.

The performance of 4x4s in the used market at three years old has prompted many claims that it is being driven by increasing fuel costs and other factors such as congestion charging.

Experts at CAP, however, argue that higher running costs are playing a relatively minor role in weakening used values for 4x4s and point instead to the simple mechanics of supply and demand.

The transformation of the 4x4 from a workhorse into a lifestyle vehicle in recent years has led to major growth in volume. This is demonstrated by the 150 per cent per cent increase in the number of models available new over the past three years. In 1998 there were 282 4x4 models available new – a figure which has grown to more than 700 today.

CAP Forecast Manager for passenger cars, Jeff Knight, said: “As volume increases, used values inevitably adjust downward as the old image of exclusivity is eroded and increased choice makes competition to sell used examples more fierce.

“Although this budget is likely to provoke speculation about 4x4 values meltdown, an increase to £300 in the Road Fund License, rising to £400 next year, is a small sum for those who are prepared to pay a retail price of, for example, around £26,500 for a three year old BMW X5. “

Knight does, however, predict that older vehicles will be affected by the increase. He added: “People who aspire to the 4x4 lifestyle statement and are on the borderline of affording an older example are likely to think twice about incurring a Road Fund License charge of £400 for cars emitting 225 or more g/km of CO2 from April next year.

“The rest of the target market for large off-roaders are highly unlikely to force prices down by steering clear of higher Road Fund License costs unless it is increased by a much higher proportion than Gordon Brown has announced.”

22 March 2007 Staff
 

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