Strong demand drove up used values by an average of 0.4% in February.

The figure is a significant improvement on the 0.1% increase in February last year, and signals a strong start to the year on dealer forecourts and in auctions, according to vehicle data experts Cap Hpi.

Derren Martin (pictured), senior Black Book editor at Cap hpi said: “Strong demand is driving up values across the industry.

“This comes on top of a generally strong year in 2015, and while it is good news for retailers, it is important to keep an eye on late-plate volumes, particularly those generated by pre-registrations.  We are seeing some signs of weakness in the nearly new sector, which is not showing the gains of other sectors.

“Within the overall figures, there were vehicle ranges that performed strongly and moved up in value, whilst for others, supply outstripped demand and values did drop. It was not a wholly consistent picture.”

The city car sector showed the strongest gains with an average value rise of 1.5% in February, whilst the Ford Fiesta recovered from drops at the end of 2015 and in January, with values on popular petrol Zetec models going up in black book live by £150 at the three-year, 60,000 mile point.

Larger SUV values declined slightly with a drop of 0.2% as a harsh winter failed to materialise.

“March is likely to see used car supply levels slightly down for most of it and demand similar. During March last year, values on average stayed level and it would be fair to expect much the same this time around, although there are more cars in the market compared to 2015.

“Franchise dealers will continue to be focussed on new car registrations. Early order take is high - but demand from the non-affiliated used retail sites will remain strong.”

Cap Hpi points to an earlier Easter potentially impacting on used car demand.

 With some school holidays starting prior to Easter and some not until a week afterwards, this drop off in demand is likely to be extended for a longer period than normal.

Values will come under pressure at this time – in the final week of March or more likely, early in April, when part-exchanges and fleet returns generated by purchases of the new 16 plate hit the market in large volumes.