Used car values continue to fall, says Cap HPI

Pricing experts at Cap HPI say that average used car values for 3years/60,000 miles models fell by 2% in June. It follows drops of 2.3% in April and 3.1% in May.

Cap HPI says that the realignment of values impacts all sectors, with upper medium used cars dropping by 2.2%, and convertibles failing to see the seasonal uplifts usually experienced in the spring and early summer months.

Last month, Used car values experienced the heaviest monthly drop since December 2014 and the steepest fall in the month of May since live data was introduced in 2012, according to Cap HPI.

It again blamed previous high prices, a slightly subdued retail and wholesale market, along with reasonably high stock levels in the used market overall, as the main factors pushing average used car values down.

Derren Martin, head of UK valuations at Cap HPI, said: "While this could be viewed as a continued weakness, the average drop in June over the last five-years is 1.1%. We see it as a sign of stabilisation after at least two turbulent months for prices.”

Martin says that a 2% drop is “still significant” – an average of over £200 reduction – but after such a strong market in 2017 and 2018, there was “always likely to be a period of realignment”.

He continued: “Prices have been under pressure, with a reluctance by buyers to pay more, as they generally cannot pass these increases onto the consumer.

“In effect, prices have been dropping for 9-consecutive months now, with the last 7-months experiencing heavier drops than in the corresponding month a year previous.”

Cap HPI says that some models bucked the trend where demand has outweighed supply.

The "extended range" Vauxhall Ampera and Chevrolet Volt did see an increase in values, with these cars now at good value price-points and benefitting from a surge in electric vehicle acceptance. However, price rises were not uniform across the whole electric vehicle sector.

Average diesel car values dropped by more than petrol ones once again, and while the difference in value drops are not dramatic, it is a trend that has occurred in every month of 2019. Petrol hybrids dropped in price by less than the average, and their popularity is on the increase.

Martin concluded: "Overall, we do not expect anything untoward to happen to prices in the next few weeks or months. In the short-term, values will likely drop further, but generally in line with July of previous years and not to the degree they have done in the last 3-months.

"As was illustrated by the examples given, and there are many more models that did not drop at the same rate as the average, it is vitally important to keep a close eye on Live values.

“Cap HPI valuations are based off real-time wholesale transactional prices in the market and react to changes as they happen, being reviewed by experienced editors.

“These trade prices are corroborated by also analysing retail data, although it is clear that at times when the market is as volatile as it has been, advertised prices do not move anywhere near as quickly."