Largest September fall in used car values since 2008

September recorded the largest drop in used car values in the past 15 years, when in 2008 values fell by 4.1% in the wake of the banking crisis.

Analysis by Cap HPI shows that used car values fell by 1.9% or about £420 at the three-year, 60,000-mile point in September.

Derren Martin, director of valuations at Cap HPI, said: “It is important to put this month’s data into context. 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 about £575, while older cars dropped by similar percentages, 1.8% at five years old and 2.1% at 10-years old, equivalent to a fall of £250 and £115 respectively.

Among the mainstream sectors, SUVs fared the worst, dropping by an average of 2.1% or just over £500, with all sizes faring similarly with their average drops.

Other volume sectors were almost in line with SUVs, with Lower Medium dropping by an average of 2% and Superminis by 1.8%, equivalent to about £300 for the former and some £215 for the latter. The two strongest mainstream sectors were the same as in August – city cars and MPVs, both dropping by 1.1% (£85 for city cars, £220 for MPVs).

Both of these sectors continue to stabilise after several months of large drops over the spring and summer. Volumes are lower for these cars as SUVs continue to dominate.

Electric vehicles ‘best performing’

For the first month this year, electric vehicles (EVs) are the best-performing fuel type on average at three years 60,000 miles, as values have reduced by just 1%, in comparison to petrol and diesel cars at 2%.

September’s Cap Live movement represents the smallest average reduction to EVs in the past twelve months.

The relative positivity in the used wholesale market for EVs comes against a backdrop of ever-increasing supply.

Year-to-date, Cap HPI has received 30% more sold data records than in the whole of 2022, and August alone saw an increase of 82% over August last year.

Small and medium-sized models perform relatively well against the rest of the market; many of these now carry a trade value that is far enough away from more aspirational vehicles, making them look attractive in the retail market, even with a healthy margin applied.

Models such as the Nissan Leaf and Renault Zoe actually increased in value.

Martin concluded: “October will see higher volumes hitting the wholesale market, as fleet returns and part-exchanges become more plentiful from September registration activity.

“There is little reason to predict that consumer demand will improve, although the recent Bank of England announcement not to increase interest rates will not hurt and is welcomed across the industry.

“It is likely, however, that supply will outweigh demand, and with used values still high, on average, further pressure on them is likely.

“An average reduction similar to that of the last three months would not be a surprise and, indeed, is widely expected."