The slump in used car values slowed in October – the best performance for five months – with a year-on-year decline of 7.7%, according to the Cap Index.

Recent action by manufacturers on new car prices is helping to stabilise the market by renewing customer confidence.

Ramesh Notra, Cap senior economist, said: “This reinforces the view that used values will not be affected by new car price cuts, being too distant from list price to move accordingly.”

Rival values guide Glass's predicts residuals are set for a 7% drop in value next year due to the new car sales boom in 1998.

Adrian Rushmore, Glass's chief car editor, said: “Because of the bumper levels of sales in 1998 there will be almost 200,000 additional three-year-old cars for the used market to absorb in 2001 than there were in 1995.”