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PREMIUM CARS IN DEMAND DESPITE RISING FUEL PRICES

According to Glass's, the recent sustained surge in UK petrol prices is not having a

detrimental effect on the market for used luxury cars, large prestige SUVs and

supercars* - the segments with some of the thirstiest vehicles available.

 

Current pump prices are at record highs.  British motorists paid a then-record 120

pence per litre for unleaded petrol in July 2008, and the price is now exceeding

this figure.  However, unlike in 2008, this time around there have not been any

notable repercussions for the upper echelons of the used car market.

 

Whilst the value of a typical family car has risen by at least 2 per cent since

January, large 4x4s have registered a rise of twice this amount.  Also faring well

during this period are luxury cars and supercars, which have followed the upward

trend of family cars.

 

"Given the series of fuel price increases, it is perhaps surprising that there has

not been any kind of backlash in the premium sectors this time around," explained

Glass's Managing Editor, Adrian Rushmore.  "In fact, the sector that could be

described as the most fuel inefficient appears to be thriving, namely the prestige

4x4 sector that has recorded price resilience not seen in any other area of the

market."

 

The absence of an adverse reaction to record-breaking petrol prices can be put down

to several factors, according to Rushmore.  "Firstly, there is less of the

'feel-bad' factor that pervaded the economy and the market in the summer of 2008. 

Back then there was also an added buying disincentive in the shape of the large VED

increases planned for the following April and plentiful used car supply.  And fuel

prices have been rising more slowly in recent months compared to the dramatic

increases seen two years ago.  This suggests that the current high price of petrol

may, so far, not have appeared on the radar of many motorists, or they are simply

ignoring it.

 

"Fuel is the second largest cost of vehicle ownership, so there is a strong argument

that all used car buyers should give more consideration to pump prices," adds

Rushmore.  "A used car purchase only takes place every three or more years, so it is

important to consider not only fuel prices today, but also the extent to which they

are likely to increase over the entire period of ownership.  For example, a penny

will be added to duty in October and a further 0.76p in January 2011, while a

commitment to the fuel duty escalator will see pump prices rise by inflation plus 1p

a litre each year between 2011 and 2014.  Further rises may also come, if VAT is

increased and a duty hike is introduced in a snap post-election Budget."

 

Rushmore concluded: "Even though we expect used car buyers to choose more

fuel-efficient cars in future, we are not predicting the demise of the large 4x4,

luxury, and supercar sectors.  These cars are not necessarily the principal method

of transport and could represent the second or even third car in the family fleet. 

So the desire for ownership will remain high, and relatively low annual mileage will

minimise the impact of high petrol prices."

 

More at Glass's Guide

 

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