Lockdown 3 has edged used car values down, Cap HPI has said.
Values in its Live product dropped by an average of 1.4 per cent or £150, at the three-year point during January, despite many retailers reporting they felt business was brisk considering we are in a form of national lockdown.
The firm said retailers are reporting business levels at between 50-70 per cent of January 2020 levels, and the volume of cars sold through trade channels have been at around 60 per cent compared with January last year.
Cap HPI’s head of valuations, Derren Martin, said: ‘Our live trending evidence shows the used car market is certainly open for business, but at a reduced level to “normal” times.
‘With click-and-collect and click-and-deliver still permitted, consumers are still purchasing, albeit to a lesser degree than previous years because of the government’s advice.’
With the average drop of 1.4 per cent in values, Martin confirmed that the pandemic was directly responsible for the fall, causing the January anomaly, which normally sees values remain steady as demand increases.
Martin added: ‘With many buyers on furlough and dealers all stocked up from December, in preparation for January, we now see retailers in less of a mood to buy as their stock isn’t flying off the forecourts in the quantities seen last year and there’s less of a need to dip into the trade to replenish it.
Whilst the used car market and used car dealers have proved themselves to be a robust part of the economy, prices are not immune to the dynamics of supply and demand
‘Uncertainty over when this lockdown will end and what happens immediately following that has also dampened their enthusiasm.’
Some of the hardest hit vehicles have been MPVs, which have dropped by 2.2 per cent or circa £250 – a trend that’s been happening since October.
Arguably perceived as unfashionable vehicles, said Cap HPI, MPV values dropped as they are required less now with the need for social distancing. Its data also showed consumers are switching from MPVs to SUVs.
Martin pointed to three examples, the Ford Galaxy, Seat Alhambra and Vauxhall Zafira – all have dropped by more than four per cent.
Prices of electric vehicles and hybrids also remained under more pressure than their petrol and diesel equivalents, due to supply levels increasing and an unwillingness by consumers to pay the current premium over ICEs, said the firm.
Older cars are more positive, however, where average values increased on cars over 10-years old, particularly in the sports car market.
Martin concluded: ‘Our live data feeds show there is plenty of fluidity in market values across all segments and whilst the used car market and used car dealers have proved themselves to be a robust part of the economy, prices are not immune to the dynamics of supply and demand, despite remaining open for business virtually.
‘We may well see more of the same until we receive clarity on when Lockdown 3 is likely to end.’