Used car values decline sharply in longest time span in a decade and a half

author: FutureCar Staff    

Significant falls in used car values should be seen in context since they remain up to 30% above where they were before the peak in prices seen in 2021.

According to experts at cap hpi, used car values fell by 1.9% at around £420 at the three-year, 60,000-mile point in September. This is the largest monthly drop since 2008 when values dropped by 4.1% due to the financial crisis.

Cap hpi noted that September is usually a positive month for used car values. Since 2016, each September has either remained level or seen a small increase in values, except for 2021 when values went up 5.9%.

Derren Martin, director of valuations at cap hpi, emphasized the importance of putting the data into context. He stated, "Used car values currently remain some 25-30% above where they were before those extraordinary increases in 2021. The downward movements now being experienced are a relatively gentle realignment, not a crash, and they are no longer increasing in severity – value drops have been consistent for the last three months now."

Values at the one-year age point dropped by 1.6% in the month, equivalent to around £575. Older cars also experienced similar percentage drops, with 1.8% at five years old and 2.1% at 10 years old, equivalent to falls of £250 and £115 respectively.

Among the mainstream sectors, SUVs saw the worst decline, dropping by an average of 2.1% or just over £500. All sizes of SUVs experienced similar average drops in value.

Other volume sectors, such as lower medium and superminis, were almost in line with SUVs. Lower medium cars dropped by an average of 2.0%, equivalent to around £300, while superminis dropped by 1.8%, around £215.

The two strongest mainstream sectors were city cars and MPVs, both dropping by a reasonable 1.1% (around £85 for city cars, £220 for MPVs). These sectors are stabilizing after several months of significant drops over the spring and summer, although their volumes are lower compared to SUVs.

For the first time this year, EVs are the best-performing fuel type on average at three years, 60,000 miles. Their values have reduced by just 1%, compared to petrol and diesel cars at -2.0%.

September's cap live movement represents the smallest average reduction to electric vehicles in the last twelve months. This positive trend in the used wholesale market for EVs comes as the supply of EVs continues to increase. Cap hpi has received over 30% more sold data records year-to-date than in the whole of 2022, and August alone saw an 82% increase compared to August last year.

Small and medium-sized models are performing relatively well compared to the rest of the market. Many of these models now have trade values that are attractive in the retail market, even with a healthy margin applied. In fact, models such as the Nissan Leaf and Renault Zoe have actually increased in value.

Martin concluded by stating that October will see higher volumes hitting the wholesale market as fleet returns and part-exchanges become more plentiful from September registration activity. He predicts that consumer demand will not improve significantly, although the recent Bank of England announcement not to increase interest rates is welcomed across the industry. Martin expects supply to outweigh demand, putting further pressure on used car values. An average reduction similar to the last three months is widely expected.

He also highlighted the importance of cap live's daily movements in managing stock and buying and selling in a falling market.

FutureCar Staff