August sees 2.0% slide in used car values reports cap hpi

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2% fall in values at three years
But increases in value for compact EVs
cap hpi says overall August fall is nothing too concerning while noting it was a “strong movement down”

AUGUST witnessed a fall of 2.0% at three years, equivalent to £390 reports cap hpi, saying that after a strong first quarter of increasing values, August was the fifth successive month of value reductions.

The valuation experts said that August marked the largest drop in the month since the introduction of cap Live in 2012, and second only to August 2010, which saw a fall of 2.4%. The average drop between 2012 and 2019, before COVID affected the following years, was a drop of just 0.6%.

August is generally a stable month for used car values due to low supply and steady demand. However, this year, supply is increasing, despite low registrations over the last three and a half years, and demand is more muted than usual. All this comes at a time when values remain inflated from 2021 increases.

As ever, the headlines do not paint the full picture. For example, average movements in isolation show that EVs are the second strongest performing fuel type this month, with diesel, petrol and plug-in hybrid vehicles all seeing larger adjustments. The fall of 1.7% is the smallest movement applied to EVs this year. Many models are now seeing adjustments more or less in line with other fuel types of vehicles that sit in the same sector, rather than the big adjustments we witnessed earlier in the year.

Derren Martin, director of valuations at cap hpi

Derren added that August had seen less pressure for some of the smaller and medium EVs, and many of these models were now at an attractive price point in the retail market which was encouraging wholesale buyers.

The Kia E-Niro , Peugeot 2008 and VW ID.3 all increased in value this month. However, some heavy reductions have been applied to some more expensive, premium EVs at the one-year, 10,000-mile point, including the Audi Q4 E-Tron (-4.0%/£1,475), BMW iX1 (-4.0%/£1,675), Jaguar I-Pace (-4.0%/£1,550), Mercedes-Benz EQC (-5%/£1,500) and Polestar 2 (-6.0%/c.£2,000).

The supermini sector dropped by an average of 2.4%, equivalent to some £250, continuing a downward trajectory since April. While SUVs fell by 2.1% (£500) in August, medium-sized models were hit the hardest, particularly where volumes were high, and where multiple examples of similar models existed.

Overall, with retail and wholesale used markets slightly muted, values have realigned in August. The average is nothing hugely untoward, and certainly no crash, but a relatively strong movement down for the time of year nevertheless.

Looking forward, sales channels in the new car market will be an interesting one to watch in the pivotal plate-change month. The retail market is subdued, with pressure remaining on household budgets, so it is likely that there will be some attractive offers to consumers, as well as larger volumes being diverted into fleet. Volumes will no doubt increase in the used market accordingly, as part-exchanges and fleet returns appear in larger numbers. The necessity of purchasing used cars will be a constant but at the more aspirational end. Will consumer demand be enough to mop up the increased supply?

Derren Martin, director of valuations at cap hpi