According to used car valuation expert CAP, small cars are depreciating in value at less than half the rate of a year ago due to limited supply and a surge in demand for the likes of the Ford Fiesta and Vauxhall Corsa.
The figures, taken from cars that are three years old, show the average depreciation for a small car over the past three months is 4.1 per cent compared to 8.3 per cent in the same period last year.
Mike Hind of CAP said: “”The CAP Used Car Price Index confirms that demand is generally strongest at the smaller end of the market and this has resulted in slower depreciation this summer.
“With no economic recovery on the horizon it seems certain that smaller and more economical cars will continue to depreciate more slowly than ‘petrol guzzlers’ as running costs overtake image in the priority list for used car buyers.”
However, even the UK’s favourite car, the Ford Fiesta, cannot compete with the likes of the smaller Ford Ka, Fiat 500 and Peugeot 107 in terms of retaining value.
In the same period, city cars lost just 0.9 per cent of their value, making it the second best performing segment after luxury executive cars, which includes the Jaguar XF.
The figures highlight the move towards more frugal small cars in the UK as dealerships up and down the country welcome the new 61 plates.
However, CAP points out the residual value of a car will not just depend on the size of the car or how efficient its engine is. Instead, it will vary based on the condition, mileage and even equipment and options of the car.