Used car values stabilise after 10.5% fall | Positivity for used EVs

An end to the phase of volatility the used car market saw between October and December 2023 has ended, according to the latest residual value data from Cap HPI.

January saw used values at the three-year, 60,000-mile point reduce by a negligible 0.1%, equivalent to minus £90 on average.

The fall of 0.1% was the strongest performance in a month since March last year and is in line with the average movement in January, which sits at -0.3% for the previous eleven Januarys since Cap Live was introduced and is the fourth most positive January in that period, the strongest being a 0.6% increase in 2020.

Derren Martin, director of valuations at Cap HPI, said: “It has been well-documented just how far prices fell in the final quarter of 2023, as reflected in Cap Live value movements, which dropped by an average of 10.5% in that October-December period.

“There was the perfect storm of heavier supply, lower demand, high used car prices and lower-than-market values for fleet companies’ residual values on stock returning to the market.”

All this meant wholesale sellers were prepared to sell for low percentages of monthly Cap, which drove values down in its Live product.

“Thankfully, this short period of volatility has come to an end,” Martin continued. “January Cap Live saw some small drops up to the 10th of the month, but at that point, there was an about-turn, and values started to go back up for many models.

“If the monthly deadline cut-off had been a couple of days later, the monthly movement reported would likely have been a small positive one.”

Values did fall slightly more at younger ages, with a 0.5% decline at one-year, 10,000 miles, equivalent to around £285, with more pressure on this age of car due to some keen new car offers and year-end pre-registration activity, but again the movement down is small.

At older ages, there was a 0.1% drop at five-years old and 0.3% at 10-years, equivalent to average drops of just £50 and £20, respectively.

When examining the data for petrol, diesel, and pure hybrid cars in isolation, the average movement at three years old is a positive of 0.1%, and a negligible 0.1% move down at one year old.

Battery electric vehicles (BEVs) and plug-in hybrids fell by 1.8% at the three-year age point, equivalent to over £425, with BEVs dropping by 1.9% (£720) at one-year-old.

However, there is some positivity for BEVs, with the Nissan Leaf and Renault Zoe looking competitively priced now and not moving in January, while the Mercedes-Benz EQC, electric BMW i3, and Mini Convertible Electric all increased in value in the month.

Martin concluded: “Over the coming weeks, we are not expecting a downturn in fortunes, and as stated, January has improved the longer it has gone on.

“Last February, values went up by 1% in Cap Live and then a further 0.5% in March, before they started to drop from April. It would not be a surprise to see something similar for the next few months this time around.”