11:52 am, August 26, 2022
Used car prices continued to stay steady in August as the market was again hit by low supply and diminished demand.
Prices dipped by 0.3 per cent in August, continuing a theme that’s been described as a ‘plateau’ by valuations experts Cap HPI.
Speaking on Car Dealer Live – which you can watch at the top of this story – the firm’s director of valuations, Derren Martin, said: ‘We’ve had another month of plateauing – it’s the fourth month in a row where we’ve had minimal movement.
‘Values at three-years were down by 0.3 per cent, which is less than £50 on average – it’s a benign market.
‘We’re still in that situation where there’s low supply, low demand and previously high prices. So those factors all combine to make it fairly flat.’
Martin dug deeper into the headline figure and revealed that while demand is low across the board, it’s stronger at the nearly-new end.
‘Younger cars have gone up on average, so there’s a bit of a shortage of one-year-old cars – driven by people who can’t buy a brand new car,’ he said.
‘There’s also the theme of rental companies buying cars from auctions and dealers because they’re starved of new cars from manufacturers.’
While the market is strong for nearly-new motors, older ones are suffering.
‘Cars of around 10 years-old have been more affected – they’re down by around two per cent or £100. Petrols and diesels of this age tend to be more thirsty and attract higher road fund licences, so they’re not so much in demand.’
August continued the theme of dealers scrabbling for the best quality stock, too.
‘Clean cars or cars in good condition are selling well, while damaged ones are struggling,’ explained Martin. ‘Dealers aren’t willing to buy work and wait for new parts to arrive, and if the market does drop away, even if it’s slightly, they don’t want a car that’s sitting in a workshop for weeks.’
Dealers are speculatively buying for September, knowing that new cars probably won’t be to the volumes that they’ve been previously
While values do tend to drop in peak-holiday season, August did present something usual, however.
‘What is unusual is the low movements we’ve had over a prolonged period,’ said Martin. ‘So, over a four-month period during the summer of 2019, values were down by 8.5 per cent. In a normal year they go down by five per cent.
‘This year, though, they’ve gone down by two per cent. It’s a flat market this year.’
Martin also said how dealers are having to work harder despite a plateaued market, and that values of petrols and diesels fell while electric and hybrids all rose.
‘Dealers are becoming more confident stocking electric cars and hybrids, and consumers are after them as well – obviously with cost-of-living concerns.’
Looking ahead to September, the valuations expert said: ‘I think there’ll be more cars coming through from the manufacturers as they will still want a good September – but it will be brand specific. This will in turn generate more part exchanges and fleet returns.
‘It won’t be at levels of previous years, though, but there will be more cars coming through.
‘Demand-wise, September might be okay as customers come back from their holidays – certainly, we’ve seen an uptick over the last week or so of August.
‘Dealers are speculatively buying for September, knowing that new cars probably won’t be to the volumes that they’ve been previously. Values might drop away a little because of supply going up and demand not being strong, which could put a bit of pressure on values, but there definitely won’t be a crash.’
You can watch the full interview with Derren Martin at the top of this story
