Largest monthly drop in used car values in over a decade

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【Summary】Average used car values experienced the largest drop in a single month in over a decade, falling by 4.2% in October, equivalent to £850. This is the largest decline since May 2011 and comes after three years of upward movements or stability. Values have now dropped by a cumulative 13.6% in the past seven months. Petrol cars saw a 4.6% decrease, diesel cars dropped by 4%, hybrids decreased by 4.1%, and plug-in hybrids fell by 3.9%.

FutureCar Staff Oct 27, 2023 4:27 PM PT

Largest monthly drop in used car values in over a decade

The average value of used cars at three years and 60,000 miles dropped by 4.2% in October, equivalent to £850, based on new data from Cap HPI. This marks the largest decline in a single month since the introduction of Cap Live in 2012, and the biggest fall since May 2011, over 12 years ago.

Derren Martin, director of valuations at Cap HPI, described October as a "fascinating month" in terms of price fluctuations. He acknowledged that while used car values have generally remained high due to previous years' increases, the current reduction is significant. Only three times in the past decade have there been monthly drops in Live values exceeding 3%, and this October's decline is the largest ever recorded for the month.

Martin stated that the cumulative drop in values since April now stands at 13.6%, which represents a substantial realignment. He described October as a groundbreaking month for used value drops, with significant reductions compared to previous years of upward movement or stability. Despite the market shifts, Martin emphasized that prices for petrol and diesel vehicles are still approximately 20% higher than at the beginning of 2021, indicating a realignment rather than a crash.

The one-year-old cars experienced an average drop of 3.6% in value during October, equivalent to around £1,225. This decline was influenced by an increase in late-plate cars and some pre-registration activity. At older ages, values dropped by 4.3% at five years and 4.5% at ten years, amounting to £550 and £240, respectively.

Petrol cars saw an average decrease of 4.6%, while diesel vehicles dropped by 4%. Hybrids and plug-in hybrids experienced declines of 4.1% and 3.9%, respectively. Electric vehicles (EVs), on the other hand, were the best-performing fuel type for the second consecutive month, with an average drop of 2.4% in October, or around £650.

Remarketers noted a strong demand for EVs from retailers, but businesses continue to prioritize replacement over stocking up. The Renault Zoe and Nissan Leaf were the top-performing models, with both experiencing an increase of around 2% in value at three years old. Convertibles and coupe cabriolets were the most adversely affected, with declines of 5.4% and 7% respectively, resulting in an average loss of over £1,300 at three years old. These niche sectors typically experience seasonal movements, but concerns about the cost of living and rising insurance premiums have exacerbated the downward trend.

SUVs, the largest sector in terms of volume, also experienced a significant drop, with values decreasing by an average of 5% in October, equivalent to over £1,000. Martin highlighted that the value changes are based on extensive trade and retail data. He expects the supply of used cars to increase as manufacturers ease supply constraints and strive to gain market share and meet environmental targets.

Looking ahead, Martin anticipates further value drops in the coming weeks. He emphasized the importance of embracing live, daily values in such volatile times, as monthly values can quickly become outdated. He noted that in the past, drops exceeding 3% have occurred in November, and it would not be surprising if that were to happen again this year.

For more information on market expectations for the used and new car market from Cox Automotive, click here.