Valuations experts are telling consumers now is the time to sell their used cars as prices continue to rocket.
In an exclusive video interview with Car Dealer, Cap HPI head of valuations Derren Martin reveals that in September alone prices have jumped by 5.9 per cent on August.
So far this year, prices across the board on used cars have risen by an incredible 26 per cent year on year.
In cash terms, that equates to as much as a £14,000 rise on vehicles such as the Mercedes V-Class.
The price rises have also led to some used cars costing more than their new equivalents as a squeeze on production of new cars sends people searching the used market instead.
Martin said: ‘It’s gone crazy again during September – it’s ramped up again.
‘I hold my hands up, when I was on [Car Dealer Live] with James Batchelor I said it would go up by two per cent this month so we’ve cut off our values today and it’s gone up by nearly six per cent – at 5.9 per cent.
‘It’s something like £860 on a three-year-old car in just a few weeks.’
Martin said he thinks the price rises are now being caused by a combination of factors, including a shortage of new car supply with people being put off by 12-month waiting lists, some pent-up demand and accidental savers splashing out.
He said: ‘You can now throw in that people go into a dealer to buy a new car to be told, from what we’re hearing, there are 12-month lead times for some cars.
‘There are some cars that have been taken off sale completely, some cars that are just not being produced – and they are volume cars and it’s for the foreseeable future.
‘You can get a used car but it’s going to cost you. In this day and age, if you want something then you want it now, so that is very much playing into the hands of the used car market.’
For those consumers sitting on a used car waiting to sell, Martin says if he was in their position he would cash in.
He added: ‘I would sell it. I sold my mum’s car and I didn’t wait. You can wait – I don’t think prices are going to come crashing down any time soon – but you can sell them and make strong money now. I would probably sell now.
‘We do think that values are probably going to go up again, but I keep saying they can’t keep going up by this amount.
‘We’ve got cars that are above list and the national press are taking an interest now, so consumers are aware that their cars are worth more and in some cases you’ve got Zafiras that have gone up by £5,000.’
Martin says he doesn’t think this demand will drop away any time soon either.
Cars in the wholesale trade market are down by around 20 per cent in volume on this point last year and around 15 per cent down on the same time in 2019.
With fewer new cars sold and fewer lease models in the market ready to return and trade on, the volume of used cars is simply less than it would be normally – again, a factor pushing up prices.
Price rises have been across all sectors too, with no specific models shooting up more than others, explains Martin.
He said: ‘Previously, it was the aspirational cars that were going up.
‘They’re now not going up necessarily but it’s the commodity cars – the Zafiras and Astras, the Kugas – models like that.
‘The Toyota Auris, the hybrid that went down previously, is now going up fairly rapidly. Some of the figures are eye-watering.
‘A V Class which had gone up by £11,000 has now gone up by £14,000 in the last six or seven months.
‘There are obviously different reasons for different cars going up in value but it is unbelievable.’
Martin thinks it is likely we’ll see more cars joining the list of those that cost more than new as the year rolls on – and it could lead to price rises from manufacturers.
He added: ‘It will be very interesting to see what happens with new car values – whether manufacturers put their prices up, because I think that will help some of this residual value stay high for longer.
‘We’re a bit surprised they haven’t already. Generally, used cars going above new cars is not sustainable and the more they go up, the more likely they are to come down heavier if they do go above list.
‘I think prior to that phenomenon happening it could have been a resetting of used car values up, but the more they go above list that isn’t sustainable.
‘We’ve got one-year-old cars with 10,000 miles on the clock that are worth more than a new car.’
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