Used car values record largest drop in a month in over a decade

The average value of a used car at three years, 60,000 miles, fell by 4.2% in October, equivalent to £850, according to new figures from Cap HPI.

It is the largest drop in a single month since the introduction of Cap Live in 2012 and the largest fall since May 2011, more than 12 years ago.

Derren Martin, director of valuations at Cap HPI, said: “It has been a fascinating month witnessing how prices have been affected and Cap Live values have moved during the hugely challenging month of October.

“Whilst used values do generally remain high from prior years' increases, there is no escaping that this is a considerable reduction in value.

“Indeed, In the last 10 years, we have only witnessed monthly drops in Live values of over 3% on three occasions - November 2014, May 2019 and November 2020, and this is the largest October fall ever recorded.”  

It is a considerable realignment, according to Martin, with values now having dropped by a cumulative 13.6% in seven months since April.

“Overall, October has been a ground-breaking month for used value drops,” he said. “Large reductions both for the time of year and in general, a considerable realignment following three strong years of upward movements or stability.

“Market prices are shifting, but they remain close to 20%, for petrol and diesel vehicles at least, above where they were at the start of 2021. This remains a realignment, albeit significant, not a crash.”

Values at the one-year age dropped by an average of 3.6% in the month, equivalent to around £1,225, not helped by more late-plate cars and some pre-registration activity.

At older ages, values dropped by 4.3% at five years and by 4.5% at 10 years, equating to £550 and £240, respectively.

Petrol cars dropped by an average of 4.6%, diesel by 4%, hybrids by 4.1% and plug-in hybrids by 3.9%.

For the second month in a row, EVs were the best-performing fuel type in terms of value movements, with an average drop in October of 2.4% or around £650.

Remarketers reported healthy demand from many retailers to source EVs, but businesses continue to take the strategy to replace rather than stock up.

The two models that performed well are the Renault Zoe and Nissan Leaf due to the attractive, relatively low, retail price points. Both models saw an increase of around 2% at three years old.

Convertibles and coupe cabriolets are the worst affected, dropping by 5.4% for the former and 7% for the latter, for both, this is over £1,300 at three years old on average.

A seasonal movement is usual for these niche sectors; however, cost-of-living concerns and increasing insurance premiums have exacerbated the downward moves.

The largest sector in volume terms, SUVs, have experienced a not dissimilar drop, with an average of 5% removed from values in October, which is more than £1,000.

Martin said: “All value moves are based on considerable evidence in trade data, with retail advertised data also heavily referenced.

“We expect supply into the market will continue to increase, with manufacturers' supply constraints eased and a renewed push for market share, volume, and to hit environmental targets.”

He added: “It is highly likely that we will continue to see values drop over the coming weeks. Indeed, it is at times like this that monthly values become out-of-date almost before they are published, and we would encourage the whole industry to embrace live, daily values in such turbulent times.

“Since Cap Live was introduced in 2012, we have twice witnessed drops in excess of 3% during November, and it would be no surprise for that to happen again this year.”

For more on market expectations for the used and new car market from Cox Automotive, click here.