The residual values of budget manufacturers, such as Hyundai and Kia, are now competing with or beating their higher profile competitors.

Glass's says that budget marques have succeeded in cutting rates of depreciation on their cars in four ways: by targeting niche markets (such as coupe and SUV); increasing awareness of their value-for-money proposition amongst prospective buyers; adopting European styling with greater attention paid to fit, finish and quality of materials used; and by avoiding an over-supply of their vehicles within the used car market.

Examples of budget brands boasting strong residual values are becoming increasingly commonplace:

  • The Hyundai Coupe has built up a loyal following, which is now reflected in 54% retained value after three years, compared with the Ford Puma at 48 per cent.
  • the Hyundai Santa Fe holds on to 56% of its original list price after three years, now level-pegging with the Land Rover Freelander.
  • In the large MPV sector, the Kia Sedona now enjoys a residual value of 59% after three years, while the Volkswagen Sharan is at 52% and the Renault Espace is at 43%. What started as a budget offering in the sector is quickly becoming the class leader.

    "The real challenge for the budget manufacturers is to break through into the big-selling small and lower-medium sectors, where volume players like Ford and Vauxhall dominate’, said Chris Smith, car editor at Glass's.

    "Whether significant numbers of UK buyers will be willing to gamble on budget vehicles in these sectors remains to be seen, but no-one should doubt that the likes of Kia and Hyundai have the resources and commitment to threaten the established volume players."