USED values went negative in October, reversing an extended run of rises from March.
cap hpi says that used values dipped by 2.1% as wholesale prices dropped across the board, with trade buyers becoming edgy about paying higher prices for cars.
Derren Martin, head of valuations UK at cap hpi (pictured), said that during October the trade market had moved sooner and quicker than the retail one. This had made the market decline more difficult to trace, “particularly for those that price purely off advertised prices”.
If trade prices are on the decline, live, daily values based off wholesale data are essential for vendors and buyers alike, so as not to get caught off-guard with pricing. The market appears to now be undergoing some realignment. There are several factors at play. Values do tend to drop in the final quarter of the year, by varying degrees, as demand drops away in the run-up to Christmas and supply levels usually increase. We do appear to be experiencing that drop off in trade demand, but it is exacerbated this year by economic uncertainty, high prices and reasonable predictions that the consumer appetite for used cars that has driven up prices cannot last forever.
Derren Martin, head of valuations, cap hpi
Both city cars and superminis have proved popular over the last few months but even these weren’t immune to above-average falls in October, reported cap.
City cars reduced by an average of 2.9% (c£150) at the three-year point, with larger drops for the Citroen C1, Skoda Citigo, Vauxhall Viva and Volkswagen Up!
Superminis reduced by 2.5% (c£200) in October, with some of the most heavily affected at three-years being the Ford Fiesta, Hyundai i20 and Kia Rio. Younger used cars were less affected by a pricing move, with franchise dealers switching customers from new to used when availability was an issue.
All other mainstream sectors experienced a downturn in values, with lower medium (C-sector) cars, the next most heavily affected.
Martin said that SUVs had held up slightly better than most, despite being almost one-third of wholesale volume now. Large SUV models had performed the best in terms of price, moving down in value overall by just 0.5% (£150) at three-years-old.
Growth in EV used car availability
The supply of electric vehicles being offered in the used wholesale market continued to grow, cap hpi reporting that year-to-date disposal volumes had increased by around 20% over the same period last year. Martin commented:
“While there is no doubt that there is a demand for used EVs, an increase in supply and the premium they attract over a petrol or diesel vehicle still acts as a barrier to the mass market.”
Martin concluded:
“2020 has been completely different from any other year in history and that includes what has happened to values of used cars, rising against all expectations. It is particularly difficult to predict what may happen, with so much uncertainty due to localised lockdowns – whether or not car retailers can sell and deliver cars in Wales remains a grey area at the time of writing.
“Whilst trade volumes are not as high as in previous years due to lower than normal registration volumes, and leased vehicles are still on extensions, plus new car supply issues, it is still highly unlikely that demand for wholesale stock will overtake supply for the remainder of the year.
“As a result, with values remaining higher than they were a year ago, by over 5% on average despite the recent live drops, we are forecasting that values will continue to drop in November.”
Automotive and fleet writer for Broker News
