Today I received a query from a client for whom we provided a number plate valuation. He was somewhat surprised that our valuation of his registration number was lower than the price he had paid some time earlier. And a little incredulous that it was possible.
I wouldn’t say that valuations will always be 100% correct. And it may be that there is a market out there for this private registration number, of which we are unaware. But it did prompt me to realise that there is a general expectation that all registration numbers will go up in value.
So can the value of a number plate go down? In a word, yes.
Like any investment, the value of a number plate can go down (as well as up of course!).
Why?
Firstly, that depends on how the registration number was originally purchased. If bought from a dealer, the purchase price is ‘inflated’ by the dealer’s commission fee, and possibly also VAT. When selling the number plate on, the VAT cannot be recovered. So the increase in value has to overcome both the initial dealer’s commission fee and VAT. So even if the registration number hasn’t dropped in value, it’s still possible that its owner may sell it for less than the original price paid.
Even when an unissued number plate is bought from the DVLA, it’s possible for the value to drop. The DVLA apply a ‘formula’ for valuing the majority of number plates for sale, regardless of the popularity of the specific letters. There are, of course some exceptions to this… particularly if the letter / number combinations create a recognisable name or word.
Registration numbers bought on the market, however, are valued individually, according to the market. So it’s possible for some (apparently similar) registration numbers to increase more than others. And for some to decrease. Less popular initials, such as X, Y, and F will not sell as easily as other letters. Where the letters combine with the year identifier to create a word or name, the value will be higher. The value will, of course, depend on the level of demand for that word or name. And how well the registration number creates it.
A number plate can also decrease in value if it relates to a particular theme, such as a specific car model. If that model is no longer made, demand gradually drops, and, consequently, so does the value of the registration number.
See my earlier post on investing in private number plates for more information.
The value of a number plate, like most things, is worth what a potential buyer is willing to pay for it.
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