Used car values have continued to fall in May but at much lower levels than we saw in March and April, according to Cap HPI.
Derren Martin, director of valuations at the firm, spoke on Car Dealer Live and said that the latest figures seemed to show values were plateauing.
He said: ‘In March and April we dropped our live values both by the same amount of 2.1 per cent on average, which was around £350. But in May we’ve seen what we’d describe as a plateauing really with a bit of stability in the market.
‘It’s pretty mixed out there but the value drops that we’re seeing are 0.7 per cent down, on average.
‘It’s a lot more stable than it’s been over the last two months, which is quite reassuring for the industry.’
Following the highs of 2021, values have continued to fall, but Martin believes the latest figures are positive news for dealers who are cautious with the stock they are buying.
‘It’s actually calmed down a lot. Looking back at values, apart from last year when values were going up considerably and the Covid year when we didn’t move values in May, it’s been the most positive May we’ve seen since 2009,’ he said. ‘It’s quite a strong picture out there from that perspective.’
He said that the reason for this is from the unusually low demand and supply, adding that he’s hearing from dealers that demand is around 70 per cent of where they’d expect it to be at this time of year.
Martin said: ‘I think we’re in a really unusual situation where consumer demand is low but supply levels are low as well.
‘We’ve never really been in that situation, not that I can remember anyway. It’s usually that one outweighs the other or you get high supply and high demand.
‘Demand being low and supply from the auctions being low, is a bit of a concern but they seem to be balancing each other out.
‘You can put a positive on that because if there was a lot of stock out there it could be a bit messy with values.’
This combination could be around for a while, he believes, with new car supply still low, auction supply struggling and consumer confidence all adding to the mix.
However, he advised that dealers should be cautious with how much stock they carry but have the confidence to buy cars that may need a bit of work.
‘We don’t think there will be seismic drops coming over the coming months’, he said, but added he wouldn’t be stocking up ‘in huge numbers’ with cost of living concerns still lingering.
The Car Dealer Live with Derren Martin can be watched below or at the top of this story