Used car prices have recorded their fourth consecutive month of rises with average values across all vehicles up half a per cent.
The unusual but steady creep upwards of prices over the summer is continuing to be driven by car buyers looking to treat themselves with a new vehicle – and there’s no sign of them going down just yet.
Cap HPI head of valuations Derren Martin told Car Dealer – in an exclusive video interview – said that he wouldn’t like to predict when prices may start going down again, but when they do it won’t be ‘seismic’ shifts.
He said: ‘I think at the moment there is no sign of it and I don’t want to be the one out there spreading doom and gloom.
‘At the moment [the market] is holding up well and there does tend to be a case of what goes up must come down but that might not be yet and that might not be to a great degree.
‘These are the values that people are buying these cars for and acquiring these cars.’
Martin, who was speaking to us as he finished off monthly prices for September for Cap HPI customers, said the market has been particularly strong for SUVs with these models accounting for 30 per cent of total volumes sold.
The BMW X5, Audi Q5, Range Rover Velar and Mitsubishi Outlander diesel models had all recorded impressive price rises as buyers look for these models in particular.
Meanwhile, city cars have dropped slightly after a meteoric rise in prices over the last 12 months. Martin called this more of a ‘readjustment’ in pricing.
But what happens next? With September new car sales looking particularly buoyant and almost certainly ahead of last year, can these used car price rises continue?
He said: ‘It’ll be interesting to see what happens with September and the cars that come through.
‘At the moment the market is looking good and we think it will continue as it is for the time being.
‘The auction houses are all selling very well and remarketers are putting their prices up – I don’t think that can last forever, but it will for some time yet.
‘It could get tricky towards Christmas, but at the moment it is ok.’
With rising job losses, a second lockdown possible and tighter restrictions some people can’t understand quite why used car prices are going up.
Martin said it was a combination of reduced supply and more people needing a new vehicle to replace either public transport use or simply to cheer themselves up after months of hard work.
He added: ‘We’ve never been in this situation before and we didn’t expect it to be as strong as it’s been and there’s lots of different dynamics with pent up demand and people not wanting to go on public transport, but I definitely think there’s a case of people just wanting to spend some money because it cheers them up.
‘People are fighting over cars that are in good condition.
‘It’s a little bit of everything that is causing the market to be so strong and it’s much needed for the industry after a couple of months of lock down. No one really predicted it.’
Looking ahead to next year and beyond, Martin said it was ‘very difficult’ to predict what was going to happen next, especially with so many unknown quantities with the coronavirus.
He said the first quarter of 2021 is likely to be pretty good and they’ll be a ‘tipping point’ around Easter.
‘The high volumes from previous years like 2018 will come back in 2021 and cars from 2017 that didn’t come back into the market this year will start to come back too,’ said Martin.
‘There is potential for it to soften from March/April time, but when realignment comes it won’t be seismic.’