Used car values return to growth as lockdown ends

Used car values have returned to growth after five months of decline, according to Cap HPI.

Its Live values reported an overall increase of 0.1% at the three-year point during March. It comes off the back of average drops of almost 2% for each of the last five months. 

The business predicts that April and May will witness wholesale prices increasing as dealers seek to satisfy increased consumer demand, particularly with some uncertainty over supply levels in the new car market.

Derren Martin, head of valuations at Cap HPI, said: “Initially as we entered March, values continued to drop in the same way they had over previous months. Over the last 2-3 weeks, however, the market has turned.

“Dealerships have been taking employees off furlough and they have been more actively stocking up to cope with increased consumer demand, both now and when car showrooms reopen in early-to-mid-April. More so than ever, though, the devil is in the detail as prices have varied for different sectors of the market.”

Cap HPI’s Live data shows alternatively-fuelled vehicles have continued to reduce in value. Electric vehicles dropped on average by 1.4%, equivalent to almost £400 at three-years old, with plug-in and pure hybrids very similarly affected. Supply continues to outstrip demand and these cars still look expensive compared to internal combustion engine cars, according to Cap.

At the aspirational end of the market, prices of convertibles are rising at levels rarely witnessed before. Older cars, where there is lower volume, have been the strongest.

Even where there is volume, such as the Mercedes E-Class and the BMW 2-Series. Increases of upwards of 12% (£1,750 and £1,500 respectively) are rises generally not experienced in a single month.

Martin expects the used car market to continue to be strong: “We are not expecting pent-up demand to be quite at the levels they were following Lockdown 1 last year, but there will still be plenty of buyers actively seeking out a used car.”