Values Of Used Prestige SUV's Defy Impact Of Growing Volumes, Reports Glass's

According to the latest analysis by Glass’s, the residual values of prestige Sports Utility Vehicles (SUVs) continue to outperform the wider used car market, despite recent increases in availability. Although many of these vehicles have experienced modest falls in their residual values over the past year, key models (such as the BMW X5, Lexus RX300, Porsche Cayenne and Volvo XC90) all still retain over 80 per cent of their original cost (as a trade value) after a year and 12,000 miles.

"Registrations of prestige SUVs have more than doubled since 2001, and manufacturers continue to produce new models in response to high levels of demand," explains Richard Crosthwaite, Prestige Car Editor at Glass’s. "However, the prestige 4x4 sector is still relatively small - accounting for below 2 per cent of the total new car market in 2004 - and their relative rarity helps underpin strong residual values."

Glass’s predicts that values in this sector will ease back over the next year, but that they will continue to outperform the market in general. "We believe that sales of new prestige SUVs will climb still further, helped by the arrival of new models such as the Audi Q7 and the Range Rover Sport. Nevertheless, so long as the increases in volume are maintained at sensible levels by manufacturers, the impact on values will be relatively modest," says Crosthwaite.

Seasonality

It was once assumed that values of 4x4s were seasonal, peaking in the winter months when 4x4 technology comes into its own. "However, the reality is that the values of most of these cars are no longer influenced by seasonal factors," says Crosthwaite. "Instead, most people buying cars in this sector are attracted by the internal space, the feeling of safety, the rugged looks, and the commanding driving position."

"The simple fact is that these vehicles remain very fashionable, and until this changes most will keep their enviable reputation for slow depreciation," he concludes.

Optimising residual values

Values in this sector remain very sensitive to a number of factors relating to engine choice, specification and colour. For example:

• It is now a given that the most desirable cars in all model ranges in this sector are diesels. A like-for-like comparison of the BMW X5 3.0 petrol and 3.0 diesel confirms that there is a £3,000 plus premium for a one-year-old diesel against a similar cost new.
• It is important for most of the large 4x4s that they are specified with automatic transmission. The automatic variants are worth in the region of £2,500 more after one year, compared with an average additional cost new difference of only £1,500 for the automatic derivative.
• It has recently become essential for these cars to be equipped with satellite navigation to optimise strong residual values. For example a BMW X5 without COMMS is likely to be worth £2,500-£3,000 less after one year.
• The absence of leather, desirable metallic paint (silver/grey/blue), as well as certain specification ‘packs’ can have major implications for residuals. In the case of the Mercedes ML, Luxury and Family (7 seats) packs are required to achieve the maximum value on the used market. A Mercedes ML without these packs and in a less desirable metallic (such as Titanite Red) would be worth £3,000 less after one year.

Interestingly, there is currently one key exception to how these specification requirements affect residual values in this sector. With the price of the new BMW X3 considered by some to be too close to the X5 when the usual sector options are ordered, it is much easier to sell an X3 when more sparsely specified as it can be then seen as more of a value-for-money proposition.