Ex-fleet cars that have been subject to a contract extension are starting to enter the auction halls, according to experts.

These older, often slightly scruffier, cars won’t make the same money as a three-year/60,000 de-fleeted car but delegates at the Society of Motor Auctions AGM questioned whether vendors - typically leasing companies – would fully appreciate the implications on re-sale values.

Adrian Rushmore, managing editor Glass’s, said: “There is a suggestion that cars on extended contracts have faced worse abuse because the people who had them didn’t care for them – they were fed up at having to keep the car for longer. So far it’s just a trickle of cars coming into auction.”

They enter a market where residual values are levelling off and will remain stable for the next couple of months as demand for used cars starts to match supply.

However, the conversion rates achieved by leasing companies have already started to slow, according to CAP research analysis and audit manager Colin Whelan.

The peaked at 95.4% in March but have fallen sharply this month to 86.4%. Whelan doesn’t expect them to pick up for a few months.

His view is shared by David Scarborough of Aston Barclay, which has three auction centres in the Essex area.

“Vendor conversion rates are dropping off. The market is still there but at less value,” he said.

“We have to educate vendors that we can always sell their cars, we just can’t always sell them that high above CAP.”

Mark Hankey, BCA sales director, believes leasing companies and fleets need to stop putting so much focus on the pricing guides.

“They should compare the pound note value of the car last year, not what it went for versus CAP,” he said. “That’s the real market.”

Scarborough added: “Naivety is costing them money.”

CAP figures show that April 2009 residuals are currently 11% lower than April 2008. The gap has closed, however: in March they were down 18% year-on-year and in February and January they were down around 22%.