Used car values have fallen by 2.2% this month as retail and trade demand is affected by the Coronavirus crisis, according to Cap HPI.
There was a dramatic effect on used car prices from March 16 as demand fell.
The number of cars sold on Friday March 20 was 23% lower than on March 6 and 19% lower than on March 13.
On March 23, Cap HPI predicted that values were likely to fall further.
The total cumulative Live movement during March, leading to April’s monthly values, was an average drop of 2.2% (-£275) at the three-year, 60,000-mile point, the majority of which happened in the final 10-days of valuing. For newer used cars, the drop was 1.8% (-£425) at the one-year, 20,000-mile point.
Derren Martin, head of valuations UK at Cap HPI, said: “As you would expect, all of the main sectors have been affected by this decrease in values. Rest assured, the movements that have been made in March have been reflective and not an over-reaction to feedback or industry ‘noise’. We are aware of reductions by some online car purchasing sites and some remarketers, but our adjustments have been purely as a result of used car transactional data.”
Cap HPI expects that in the short-term both used and new car sold volumes will reduce dramatically, as the industry has already witnessed in the immediate aftermath of the country lockdown.
BCA has closed all its physical auctions, now only selling cars online. It states that customers can come and collect vehicles, or have them delivered, despite the Government advising against any non-essential journeys.
Manheim, meanwhile, has paused all auction activity until the lockdown period is over. It has said it will not charge buyers for storage for vehicles remaining on site during this time.
Martin added “We will be analysing the data as always, but not adjusting used values while there is insufficient data. In effect, if vehicles are not selling in quantities anywhere close to normal, we will not be adjusting. No overall market adjustments will be made based on historical data or opinion; outliers and unrepresentative sample sizes will not be reflected. We will be closely tracking retail volumes and prices, but not adjusting any trade values from these.
“We feel this is the sensible approach in these unprecedented times – we always have a duty to reflect the market, but at present, there is not enough of a market to do so accurately.”
Analysts at Cap HPI believe when the car industry does return to anywhere close to normality, there is the likelihood of some pent-up demand, and a shortage of new cars, both which could well be positive for prices of used cars.
Short-term valuation forecasts are predicting no change to values in the next three months.
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Matt has been an automotive journalist for eight years. As senior staff writer he is responsible for the automotive content on Fleet News and also contributes to Automotive Management. Prior to this, Matt worked in the automotive industry for 10 years.
Phil Weaver - 27/03/2020 12:16
As an independent motor dealer our biggest fear financially is used car depreciation during these unprecedented times. Simply put, freeze the market pricing from March. Unprecedented times = Unprecedented action.