Used car prices fell by more than two per cent in April, Car Dealer has learnt.
It was a better performance than was predicted, though, and one that’s been described as ‘interesting’.
Speaking to Car Dealer Live, Cap HPI’s director of valuations, Derren Martin, revealed average prices at the three-year, 60,000-mile mark slipped by 2.1 per cent, or £370.
That puts April’s drop in line with March as that too saw a 2.1 per cent fall.
However, the drop was better than expected and there’s more behind the overall figure, said Martin.
‘The headline figure never paints the whole picture and even less so than normal this month,’ he said.
‘April was one of the most interesting months since I’ve been at Cap HPI – and I’ve been here for over nine years.
‘It’s been pretty mixed – we thought it was going to be heavier than that at the start of the month.
‘Prices do seem to have stabilised a little bit, but there’s no doubt that they are continuing to come down.’
Martin explained the start of April was ‘pretty tough’ with expectations of a four per cent fall by the month-end.
A shortage of new cars, the cost-of-living crisis starting to bite and many consumers favouring an Easter break rather than buying a used car all affected prices.
Prices picked up towards the end of the month and finished at the 2.1 per cent mark, with Martin suggesting values were being prevented from plummeting because of a shortage of volume.
Martin also explained how April was a ‘mixed’ picture for dealers across the board.
Some dealers during the month have had ‘their heads in their hands’ and were proving reluctant to reduce prices on cars that they have paid good money for at the end of 2021.
Meanwhile, other dealers, especially franchised ones, are experiencing the opposite and are returning to more normal behaviour, he said.
Dealers are also having to work harder than they were 12 months ago, with car buyers perhaps needing more persuading to purchase.
Cap HPI’s data for April showed the squeeze on £15,000-£25,000 continues with cars in this sector, especially with SUVs such as the Nissan Qashqai and Ford Kuga looking ‘expensive’.
However, prices across the board in most popular segments and price points have dropped by around 2.5 per cent, with only cars costing £50,000-plus holding up better at less than one per cent.
Hybrids and electrics were the best-performing of all, though, with prices for used electrics at three years old recording a 0.5 per cent fall.
Looking ahead, Martin advised that dealers need to keep ‘a tight rein on things’ by reducing prices on unsold cars, and be wary of buying cars that are too expensive.
‘There’s not a lot of volume out there,’ he said, ‘and what comes next is really interesting’.
He added: ‘Some dealers are telling us they can’t see how new car supply will improve, therefore prices aren’t going to come down by much.
‘But, if consumer demand continues to be affected, then prices will continue to come down as they are high. There are still used cars that are above list prices.
‘Prices will continue to drop but not off a cliff – it’s really important to stress that.’
The Car Dealer Live with Cap HPI comes as Cox Automotive downgraded its used car transactions prediction due to a shrinking market.
The Car Dealer Live with Derren Martin can be watched below or at the top of this story