Step 1 – Obtain current Black Book value
The forecast starts with the current Black Book value for the required vehicle at the age and the standard mileage it will have reached by the end of the forecast period. Standard annual mileage is differentiated by vehicle sector and fuel type. So, if a 3 year old vehicle is being forecast out for 2 years, then this will be 5 years old at the end of the contract and a current 5 year old starting value is sourced (at standard annual mileage). Where this is not directly available in Black Book, the value will be constructed using donor vehicles in exactly the same way as for new vehicle forecasts.
Step 2 - Applying Deflation (YOY%) Forecasts
YOY% deflation is applied for the forecast period for the relevant age/sector/fuel type combination. If the age at the end of the forecast period is greater than 5 years then the YOY% assumption for 5 year old prices for the sector & fuel type is applied.
Step 3 – Model Life Overlay
For any derivative which is still available as a current new vehicle, the Model Life overlay will be applied in exactly the same way as in the new vehicle forecast. If the derivative has been discontinued as a current vehicle, only the model aging element of the Model Life overlay will be applied – this will be calculated by vehicle sector and fuel type according to the age of the model.
Step 4 – Editorial adjustment
For any derivative which is still available as a current new vehicle, the same editorial adjustment will be applied as in the new vehicle forecast. If the derivative has been discontinued as a current vehicle, then no editorial adjustment will be applied.
Step 5 – Calculation of intermediate plates
Initial calculations for the age of the car in years at standard annual mileage will refer to the current registration plate. Plate differential calculations are then applied to derive the values for all of the intermediate plates.
Step 6 - Applying the Mileage Curve
Mileage curves are applied to the standard mileage values in a similar way to that applied for the new car forecast. Published mileage points will move from the current 3 bandings for each forecast period to 5. The central point will be the standard mileage and there will also be 2 high mileage and 2 low mileage settings published (all differentiated by vehicle sector & fuel type).
Step 7 – Progressing the forecast
CAP Gold Book used vehicle forecasts move from month to month according to expected monthly seasonal movements which reflect expected depreciation patterns by vehicle sector and fuel type. Unlike new vehicle forecasts, the used vehicle forecast for an individual plate will depreciate over time to reflect the reality of vehicle aging. Used vehicle forecasts are recalculated every time that the new vehicle is reforecast, or when the sector as a whole is reforecast.
