Driving Seat: Values soar for budget cars.

RAPID depreciation has long been presented as one of the most compelling reasons for not buying a new car from a budget brand such as Hyundai and Kia. However, this argument no longer stands up to scrutiny, according to Glass's.

The car value experts say that manufacturers have made significant strides in improving the residual values of their cars to the point where they often rival or even outperform volume brands including Ford, Volkswagen and Renault.

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 the quality of materials used and by avoiding an over-supply within the used car market.

Examples of budget brands boasting strong residual values are becoming increasingly commonplace and include: The Hyundai Coupe has built up a loyal following, which is now reflected in 54 per cent retained value after three years, compared with the Ford Puma at 48 per cent.

In the recreational 4x4 market, the Hyundai Santa Fe holds on to 56 per cent of its original list price after three years and is now level with the Land Rover Freelander.

In the large MPV sector the Kia Sedona now enjoys a residual value of 59 per cent after three years, while the Volkswagen Sharan is at 52 per cent and the Renault Espace is at 43 per cent.

Chris Smith, car editor at Glass's, says: 'The real challenge for the budget manufacturers is to break through into the popular small and lower-medium sectors where volume players like Ford and Vauxhall dominate