6:44 am, May 15, 2020
The used car market has moved considerably this week with data volumes rising by more than 70 per cent – and now CAP HPI is confident it can start to move some values once again.
Used car sale volumes have risen by 70 per cent this week as auctions reopen and the trade begins to slowly get back to work in preparation for the potential start of business on June 1 in England.
CAP HPI says a two to five per cent fall in prices has been seen in cars older than five years – but added it still won’t be moving the prices of newer used cars yet.
Derren Martin, head of valuations UK at CAP HPI, said: ‘The previous five-years have seen an average drop of 4 per cent during April and May at the five-year-old age point, and last year witnessed a 6.3 per cent drop.
‘So, the movements we are currently seeing in the middle of this pandemic are by no means seismic. We are reflecting the data as volumes slowly increase.’
CAP HPI did not move values during the lockdown as there was insufficient data to base it on, but as cars begin to sell in volumes the used car prices need to reflect the changes.
Manheim restarted auctions this week, BCA has continued to operate online sales throughout the crisis, while other auction houses are ramping up again too.
The news comes as Motors.co.uk reveals that it has analysed the used car prices of 60,000 mainstream vehicles that had remained listed on its site for the last six weeks and found that dealers have CUT prices by two per cent.
Franchised dealers reduced the price of their used cars the most, down 2.4 per cent, used car supermarkets put them down 1.7 per cent and independent dealers dropped used car prices by 1.5 per cent.
Phill Jones, from eBay Motors Group, told Car Dealer Magazine: ‘Both consumers and dealers are now readying themselves for business to open. We see visits and leads from consumers continue to increase and dealers making substantial investments in preparing for a new way of selling.
‘Retail prices have been static over the past weeks. Frankly, price hasn’t been the reason why cars haven’t been selling. However, we now start to see dealers adjust prices ready for the return.
‘There will inevitably be some who need to dispose of cars quickly, hence we are starting to see adjustments in prices.
‘The next few weeks are sure to bring volatility in supply, demand and also capacity as we all work to understand post lockdown retailing.’
CAP HPI’s Martin said that in April they observed just 7,500 used cars being sold, but that has already been surpassed in May.
Trade sales are still below usual volumes, but CAP HPI says there are enough to get a picture of some parts of the market to enable valuations to be moved.
Martin added: ‘We are now in a position to confidently move values in line with the market, taking a prudent approach using our editorial expertise, no algorithms, to analyse the data.
‘Initially, we will be moving values on older vehicles in mainstream sectors, where there is enough evidence to accurately reflect current prices, by looking at each generation of model individually.
‘No overall market movements will be applied. At the current time, younger used cars will not be moved in value as that end of the market is still very much in a hiatus.’
CAP HPI will only be moving values in the five-20 year old categories and has said unrepresentative volumes and prices will not be reflected to move used car prices.
Earlier this month, TV’s Wheeler Dealer Mike Brewer – who owns two own-brand used car dealers – called on firms setting used car values not to drastically move them without a full picture.
Commenting on falls of up to five per cent being predicted, he told Car Dealer Live: ‘If that happens, my business will collapse, it’s as simple as that.
‘We’ve supported those two publications for the past 100 years. Now, for the first time we really need them to support us.
‘For them to think we can simply knock three to five per cent off the stock value of our cars could be disastrous for the used car industry.’
CAP HPI said it will be reviewing the situation on an ongoing basis.
Martin added: ‘It’s more important than ever to take a careful, considered view from the evidence and it is likely to be a volatile time for used car prices over the next few weeks, while supply and demand dynamics work themselves out.
‘We would recommend the industry keeps a very close eye on our daily valuations as they may move in either direction.’
Earlier this week we spoke to Auto Trader about what they had seen with used car prices, and that exclusive interview can be watched below.
They told us used car prices held firm during April – even rising marginally by 0.1 per cent – according to their latest data.
Investigation: Is now a good time to buy a used car and what will happen to used car prices? Everything we know so far on used cars
You can watch the full Car Dealer Live interview with Mike Brewer here.
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