1:23 pm, October 26, 2021
Used car prices have started to plateau as the sharp increases in values begin to soften this autumn, says Cap HPI.
In an exclusive interview with Car Dealer Live, Derren Martin, Cap HPI’s head of valuations, reveals that used car prices have risen 1.2 per cent on average in October.
That means that used cars at three years and 60,000 miles are still going up – but nowhere near as fast as they were.
In September, used car prices jumped 5.6 per cent.
Martin said: ‘This month has sort of plateaued.
‘The increases are still there, 1.2 per cent is the average at three years, but it’s a lot more mixed and some have actually gone down.
‘A lot more have stayed level, and we’ve seen things like values go up in the first half of October, and then come down over the course of the month – there’s a little bit of a downward trend there for some models.
‘I think it’s actually quite good for the industry that it has plateaued.
‘It hasn’t dropped off a cliff, and it hasn’t continued to increase because some of those increases, as we’ve always said, were kind of unsustainable.’
So far this year, used car prices are still up a THIRD, according to Cap HPI.
Martin said: ‘There’s over 30 per cent increase for the year now and all of that has come since April – so in the last seven or eight months we’ve seen a 30 per cent increase.
‘I talked about this at an internal meeting and was trying to put it into perspective for people’s own vehicles – your car has gone up by almost a third of its value on average in that time and that’s the amazing thing.’
Despite the figures dropping back a little, October still saw used cars rise in value – something that’s still incredibly unusual.
But can it continue? And if so for how long?
Martin says that although demand for cars does drop at this time of year, especially as we approach Christmas, the raging semiconductor shortage that is blighting new car production looks set to be with the industry well into next year and that should keep used values up.
He added: ‘I think we’ve got some stability for a while.
‘If values drop then there is no reason to panic – they’ve gone up by 30 per cent.
‘They are going to come down at some point, but I can’t see it coming down in big chunks.
‘I think it will be relatively stable which again I think is good and a positive sign. My personal opinion is we’ve got it for at least the first half of next year.’
Martin believes the slight softening is down to less active used car buyers.
He said: ‘I think consumer demand has certainly dropped but it’s nothing to worry about.
‘It normally happens at this time of year and I think what we’re seeing is a little bit of a seasonal downturn.
‘You’ve got a bit of half-term in there. It’s just that a bit of normality almost seems to have crept in with what’s going on.
‘For prices to still go up, that isn’t particularly normal but because they’ve not increased by anywhere near as much as previously maybe we’re just seeing a normal seasonal pattern.’
Martin said the big movers are currently MPVs as they’ve traditionally not been great for residual values so have had more room to move up.
He added: ‘Upper medium, and lower medium cars – so your Astra, Focus, Insignia or Mondeo size – they’ve gone up as well.
‘SUVs, not by as much so they’ve been a lot more stable, and we have seen some cars come down in that sort of area as well.
‘The Nissan Qashqai has probably peaked and has come down, but only slightly.’
