FLEETS, contract hire and leasing companies are facing a residual value catastrophe if they decide to import cars through 'unofficial' channels from the Continent. Experts are warning that savings made from buying the cars abroad will be wiped out on the secondhand market - with the European-sourced vehicle selling for as much as 25% less than an equivalent UK model.

Manufacturer discounts fleets receive on the price of new vehicles in this country should also weaken the appeal of 'cheap' imports. Alan Pulham, director of the Retail Motor Industry Federation, said: 'If anyone is looking to bypass the official dealer network - lulled by the promises of the chance to save thousands of pounds on importing vehicles - then I would say stop now. A company will be faced with a battering on its residual values once those cars come to auction because of the stigma or uncertainty surrounding imports.'

But he stressed that this opposition would only apply to cars bought through brokers. 'If you source a car from a Ford dealer in Holland via one in this country, no one will be able to tell the difference. Go outside these channels and the problems will start.' The Driver and Vehicle Licensing Agency says the V5 of a vehicle bought and registered on the Continent and driven back to the UK would have an 'import marker' on it with the phrase 'imported vehicle or 'previously used or registered overseas' on it - unless the car was driven with trade plates attached.

Fleet management supplier Fleet Technique believes - on the basis of its experience of European motorbike imports and talking to franchised dealers - that the residual values of imports 'will only realise about 75% of the residual of non-imports'. Mark Cowling, CAP Motor Research chief economist, said: 'If a potential buyer finds out a car is not UK-derived they won't want to pay the same for it and it's all down to a perceived rather than an actual difference. And the gap in residual values can be substantial.'