Largest monthly drop in used car values in over a decade

author: FutureCar Staff    

The average value of used cars in the UK experienced a significant decline in October, according to new data from Cap HPI. The figures reveal that the average value of a three-year-old car with 60,000 miles on the clock fell by 4.2%, equivalent to £850. This drop marks the largest decline in a single month since the introduction of Cap Live in 2012 and the largest fall since May 2011.

Derren Martin, the director of valuations at Cap HPI, described October as a "hugely challenging month" and noted the fascinating impact it had on prices and values. He acknowledged that while used car values have remained relatively high due to previous years' increases, the 4.2% reduction in value is significant. In fact, over the past 10 years, the market has only seen monthly drops in values of over 3% on three occasions, making this the largest October fall ever recorded.

Martin emphasized that this decline represents a considerable realignment in the market. Since April, values have dropped by a cumulative 13.6% in just seven months. He described October as a ground-breaking month for used car value drops, with large reductions occurring despite the time of year and the overall stability of the market in recent years. However, Martin emphasized that this is a realignment rather than a crash, as market prices for petrol and diesel vehicles remain close to 20% higher than they were at the start of 2021.

In terms of specific age categories, the average value of one-year-old cars dropped by 3.6% in October, equivalent to around £1,225. This decline was partially influenced by an increase in late-plate cars and some pre-registration activity. Older cars also experienced decreases in value, with a drop of 4.3% at five years and 4.5% at ten years, amounting to £550 and £240, respectively.

When examining different fuel types, petrol cars saw an average drop of 4.6%, diesel cars dropped by 4%, hybrids by 4.1%, and plug-in hybrids by 3.9%. However, electric vehicles (EVs) performed relatively well for the second consecutive month, with an average drop of 2.4% or around £650 in October. Remarketers reported strong demand for EVs, particularly the Renault Zoe and Nissan Leaf, due to their attractive retail price points.

Convertible and coupe cabriolet cars were the most heavily affected, experiencing declines of 5.4% and 7%, respectively. On average, this equates to over £1,300 for three-year-old vehicles in both categories. While seasonal movement is typical for these niche sectors, factors such as cost-of-living concerns and increasing insurance premiums have further contributed to the downward trend.

SUVs, the largest sector in terms of volume, also experienced a significant decline in values. On average, SUV values dropped by 5% in October, amounting to over £1,000. Martin stated that all value movements are based on substantial evidence from trade data and heavily referenced retail advertised data. He predicted that the supply of cars in the market will continue to increase as manufacturers ease supply constraints and strive to achieve market share and environmental targets.

Looking ahead, Martin expects values to continue dropping in the coming weeks. He emphasized the importance of embracing live, daily values in such turbulent times, as monthly values quickly become outdated. He noted that drops in excess of 3% during November have occurred twice since the introduction of Cap Live in 2012 and that it would not be surprising for a similar decline to happen again this year.

For more information on market expectations for the used and new car market, you can click here.

FutureCar Staff