Largest monthly drop in used car values in over a decade

The average value of a used car at three years, 60,000 miles, dropped by 4.2% in October, equivalent to £850, according to recent data from Cap HPI.

This decline marks the largest drop in a single month since the introduction of Cap Live in 2012 and the largest fall since May 2011, over 12 years ago.

Derren Martin, director of valuations at Cap HPI, described October as a "hugely challenging month" and noted the significant impact on prices and Cap Live values.

While used car values have generally remained high due to previous years' increases, this decrease represents a considerable reduction in value.

Over the past decade, there have only been three instances of monthly drops in Live values exceeding 3%. This October fall is the largest ever recorded for the month.

Martin emphasized that this decline represents a significant realignment, with values having dropped by a cumulative 13.6% in the past seven months since April.

He also highlighted that October has been a groundbreaking month for used car value drops, with large reductions occurring despite the time of year and a period of stability in the market.

Although market prices are shifting, they still remain approximately 20% higher than at the beginning of 2021, particularly for petrol and diesel vehicles. Martin clarified that this is a notable realignment rather than a crash.

In October, one-year-old cars experienced an average value drop of 3.6%, equivalent to around £1,225. This decline was influenced by an increase in late-plate cars and some pre-registration activity.

Values for older cars also saw decreases, with a drop of 4.3% at five years and 4.5% at ten years, amounting to £550 and £240, respectively.

Petrol cars experienced an average drop of 4.6%, diesel cars dropped by 4%, hybrids by 4.1%, and plug-in hybrids by 3.9%.

For the second consecutive month, electric vehicles (EVs) performed the best in terms of value movements, with an average drop of 2.4% or approximately £650 in October.

Remarketers reported strong demand from retailers for EVs, but businesses continue to prioritize replacement rather than stockpiling.

The Renault Zoe and Nissan Leaf were the top-performing models, seeing an increase of around 2% at three years old due to their attractive retail price points.

On the other hand, convertibles and coupe cabriolets were the most affected, with drops of 5.4% and 7% respectively. This translates to an average decrease of over £1,300 for both types of vehicles at three years old.

While seasonal movement is typical for these niche sectors, concerns about the cost of living and rising insurance premiums have exacerbated the downward trend.

SUVs, the largest sector in terms of volume, experienced a similar decline, with an average value reduction of 5% in October, amounting to over £1,000.

Martin emphasized that all value movements are based on substantial evidence from trade data, with retail advertised data also playing a significant role.

He predicts that the supply into the market will continue to increase as manufacturers' supply constraints ease and there is a renewed push for market share, volume, and environmental targets.

Martin also expects values to continue to drop in the coming weeks, with November historically witnessing drops exceeding 3%. He encourages the industry to embrace live, daily values during these turbulent times.

To learn more about market expectations for the used and new car market from Cox Automotive, click here.