Used value realignment continues in November as values fall by 4.2%

THERE’S no avoiding the continuing softening of residual values. In November used trade values fell by 4.2%, equivalent to £775 at the three-year age point, according to the RV experts at cap hpi.

This latest decline follows October’s fall of 4.2%. In total, average trade values have dropped by 8.4% or £1,625 over the last two months as price alignment continues.

However, it’s not all gloom: cap hpi says that average values remain around 15% above where they were at the start of 2021 for petrol and diesel vehicles, while electric vehicles, on average, are around 20% lower.

It is not uncommon for values to drop in November, with movements of 3.1% in 2014, 2.6% in 2015 and 3.0% in 2020, although there have also been some stronger years when volumes were lower, particularly over the last two years. This year is, however, the largest drop going into December that we have on record. There is no escaping that a realignment, not a crash, is ongoing.

Derren Martin, head of valuations at cap hpi Tweet

At the one-year age point, values dropped by a lower, 3.3%, in November, equivalent to around £1,000, whilst older vehicles held up better, with a 2.6% drop at the 10-year point. Indeed, cars valued below £5,000 have dropped by 2.4%, less than £90 on average.

SUVs fell by 4.9% or around £940 on average, with small and medium models being the worst affected, with a drop of 10% in two months.

Petrol and diesel values at three years have, on average dropped by similar amounts, although diesel has declined by slightly less. Electric vehicles have reduced by 3.3% or £750, and this is now the third consecutive month in a row that battery-powered cars have been the best performing fuel type, albeit in a falling market.

Values will likely continue to drop in the run-up to Christmas. While retailers' appetite may increase slightly as they look to buy for an anticipated increase in consumer demand, this is unlikely to be in large quantities and not by enough to eat too much into the volumes that are present in the wholesale market. Since cap Live was introduced in 2012, December has experienced an average drop of just 1.3%, with the largest being -2.2% in 2014. With the current realignment ongoing, however, and consumer demand only likely to increase after Christmas, it would be no surprise for a downward movement in excess of these figures.

Derren Martin, head of valuations at cap hpi Tweet

cap hpi says it complies it values based primarily on sold prices evidenced in the used market. Data is received from a large number of industry sources, from large and small physical and online auctions, fleet and leasing companies, finance houses, rental companies and manufacturers used car programmes.