Used electric car values continue to struggle, reports Cap HPI

Used car values for both petrol and diesel stayed strong in August, but used electric vehicles (EVs) and some hybrids continue to struggle, says Cap HPI.

For the third month in a row, values for EVs have reduced, it reports, with feedback from the market suggesting that EVs continue to look expensive compared to their internal combustion engine equivalents. 

For the volume models, price pressure continues to be around the three-year-old EVs, which are coming back into the market, says Cap HPI.

Derren Martin, head of valuations UK at Cap HPI, explained: “2017 saw an increase of around 40% in EV new car registrations over the previous year, so it is no surprise that as more vehicles come back into the used market, values will be exposed to supply and demand dynamics.

“Some examples of models that have dropped in value at that age are the BMW i3, Kia Soul and Nissan Leaf.”

Some hybrids that have moved down in value at the three-year point are the Toyota Auris, Toyota Prius, Lexus LS and Mercedes-Benz S-Class. Some of this is due to a reduction in activity in the private hire industry, where demand for these vehicles has historically been strong.

Overall, pricing experts at Cap HPI say that the used car market remains strong in August, with values up by a minimal 0.2% at the three-year point, which equates to around £30 on average.

So far this year, there has only been one month where values dropped and that was during the run-up to lockdown in March.

On average, used car values when calculating the same models at the same age and mileage point as a year ago, are some 7% higher than they were in August 2019.

Martin said: “The used car retail market has remained robust throughout August, making it the third consecutive month since car showrooms reopened with remarkably strong consumer demand.

“Looking at the retail advertised data received by Cap HPI, it is clear that across all mainstream sectors, prices have edged up slightly on average. This is unsurprising since trade prices have increased overall and consumer demand is so strong.

“If ever there was a time to increase asking prices and maintain margins, the last three months has been it. These small average increases have not adversely affected days-to-sell.”

Martin says that consumer demand is still being driven by people wanting to avoid public transport, buyers downgrading and savers looking to upgrade.

The SUV sector saw smaller models increase in price, while larger ones were under more pressure due to significant availability, meaning prices dropped slightly.

The trend was most acute at younger ages, and at six-months-old, larger SUVs have fallen by around £225 on average, whereas smaller examples have increased by around £150.

The Citroen C4 Cactus, Dacia Duster and Renault Captur have increased in value the most of these smaller models. There is generally a very different customer for these two sizes of SUV.

Martin concluded: “Since the unexpected upturn in June, particularly at older ages, Live values during July and August have stayed very stable, as we predicted.

“September will result in more part-exchanges and fleet returns hitting the market, as new car buyers opt for the 70-plate, but it is unlikely that volumes will be as high as in previous years.”

He continued: “The reduced volumes of cars would typically lead to strong prices. However, with the furlough scheme coming to a close and an economic downturn continuing, consumers are likely to become more prudent.

“The pent-up demand from inactivity during lockdown will come to an end, as will people buying to avoid public transport – that was always likely to be a short-term dynamic. Those upsizing due to grants or savings made during the last few months will also wane.

“In short, predictions are that the next few weeks will remain stable, as there is currently no weakness in the market. However, from the end of September and into October, prices are likely to come under more pressure. What is clear is that viewing valuations in real-time and keeping vigilant will become more important than ever.”