2:57 pm, May 5, 2020
The used car market is facing a volatile first few weeks post-lockdown with prices likely to take a 3-5 per cent dip, says CAP HPI’s head of valuations.
In an exclusive interview with Car Dealer Magazine, Derren Martin revealed CAP HPI had not moved values for six weeks, but will begin to start adjusting them next week.
As activity in the trade has picked up, data has begun to trickle into the valuation experts and they believe they need to now start moving prices in a phased approach.
‘We will begin moving values of five to 10 year old cars first as there simply is not enough data yet to move the prices of the newer models,’ said Martin.
‘At the start of lockdown we were seeing just three per cent of normal volumes in used trade market. That has now picked up as more auctions come on stream to around 10 per cent normal volumes.
‘Auction houses are ramping up and I believe places like Manheim will begin more sales next week. Once we get to 15 per cent, I’ll be confident to start moving all prices and I can see that happening by the end of the month.’
Martin said prices have dropped in the region of three to five per cent on older cars – but some values have actually gone up, echoing data Car Dealer Magazine reported on at the weekend from the eBay Motors Group that suggested the same.
‘Yes, there has been a fall in values from what we have seen, but there would usually be drops in April and May,’ Martin added.
‘However, I do think supply will be greater than demand and we are in for a volatile few weeks post lockdown.’
He warned that it may not be dealers flooding the market with stock in an attempt to get money back in their banks – it could be rental companies that cause issues.
They have been particularly hard hit by the crisis as tourism has dropped off and few people are hiring cars, he explained.
Martin added: ‘If the rental and leasing companies decide to flood the market with cars because of the downturn they have seen in their businesses then it could cause serious issues.
‘We need defleeting to be carried out in a phased manner so as not to stress the market. If they can afford to hold on to the cars then they should because used car prices are all about supply and demand and with too many in the market prices will go down.’
Martin said he believed there was some pent up demand for used cars – but that it would be nowhere near enough to avoid a difficult few weeks for dealers.
He said: ‘There will be some demand, a little but not loads. There will be some people who don’t want to use public transport who will want to buy a car, but demand will not match supply.
‘This will even out over time, but it will depend on how long the recession will be. I think we could see a “W” shape to prices.’
CAP HPI’s head of valuations added that it wasn’t all ‘doom and gloom’, though.
He added: ‘Values will drop but in a recession used cars pick up in popularity. With less new cars sold there will be less supply over time too and the future will be positive.’
Derren Martin will be appearing on Car Dealer Live to discuss values on May 27
May 9 Investigation: Is now a good time to buy a used car and what will happen to used car prices? Everything we know so far on used cars
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