Tourists boycotting Britain because of foot and mouth could hit residual values as rental companies defleet unwanted cars. Fears are mounting that the fragile but hardening second-hand market could go into reverse if car rental business is hit.

Glass's Guide chief car editor Adrian Rushmore, writing in the May Guide editorial, said that while the used car market was more cautious now than six weeks ago, prices were holding firm.

“This cautious attitude is likely to manifest itself in further trade buying hesitancy,” said Mr Rushmore. “We are approaching a period of instability with used retail business expected to be both more erratic and less active. A lower level of trade prices will reflect this.

“However, no one is predicting that conditions will be as severe as they were at this time last year. One concern is that rental business from tourists will have been disappointing because of the concerns over the foot and mouth epidemic. This may give rise to additional rental defleets as the cars are no longer required.”

Last week, Avis Europe said the outbreak of the disease had damaged business and put pressure on for further rental rate increases.

Typically, says Glass's, prices have eased by about £150 a vehicle, although values for premium marques are little changed. X-plate cars are commanding at least a £700-£800 premium over W-plates.

Cap Network says confidence in the used car market is falling despite sales for the first quarter being ahead of last year. Craig Adamson, fleet editor of Cap Network's Black Book, said the market was not entering a slump but “merely an expected seasonal adjustment”.

But May's Black Book editorial says: “The huge premiums paid for the right car in the right colour are coming down to more realistic levels. However, the difference between a clean car and an average one still appears to be substantial and shows that acceptable metallic colour and specification combinations are still of great importance. As with most other sections of the market good CAP 'clean' cars are still sought after for retail, while average cars with the possibility of reconditioning costs can be cast aside.”