Used car prices have moved by just £30 on average in August as sales for the summer month remain ‘unseasonably strong’.
Used car valuations have edged up slightly in all sectors once again boosted by continuing buyer demand in a month when usually the market is depressed as many people go away on holiday.
However, that has not been the case this year.
Cap HPI believes that the pent-up demand from June and July has still not been satisfied and many buyers are treating themselves instead of going away.
Head of valuations Derren Martin said: ‘The used car retail market has remained robust throughout August, making it the third consecutive month since car showrooms reopened with remarkably strong consumer demand.
‘Looking at the retail advertised data we received, it is clear that across all mainstream sectors, prices have edged up slightly on average.
‘This is unsurprising since trade prices have increased overall and consumer demand is so strong.
‘If ever there was a time to increase asking prices and maintain margins, the last three months has been it.’
Martin said that despite the increases in prices the amount of time it takes to sell a car hasn’t been affected.
He added: ‘There appears to be pent-up consumer demand still with buyers wishing to avoid public transport, careful buyers downgrading, and savers looking to upgrade – maybe instead of taking an expensive holiday abroad.
‘There are certainly a number of interesting dynamics.’
Petrol and diesel car values remained strong and moved up marginally, but electric and hybrid vehicles have struggled and, on average, moved down.
Cap HPI says the feedback from the market is that EVs are still too expensive compared to internal combustion engine equivalents.
Some of the hybrids that have dropped – attributed to a drop in demand in the private hire industry – include:
- Mercedes Benz S-Class
- Toyota Auris
- Toyota Prius
- Lexus LS
The SUV market has been a different story depending on size – smaller SUVs have increased by around £150 and larger ones fallen by about £225.
The largest rises in August were recorded for the Citroen C4 Cactus, Dacia Duster and Renault Captur.
Martin said since the restart and the unexpected strong demand in June values have been stable for July and August.
With the September plate change coming, more part exchanges are expected to enter the used car market, but Martin doesn’t think this will be at the same level as previous years.
He added: ‘The reduced volumes of cars would typically lead to strong prices. However, with the furlough scheme coming to a close and an economic downturn continuing, consumers are likely to become more prudent.
‘The pent-up demand from inactivity during lockdown will come to an end, as will people buying to avoid public transport – that was always likely to be a short-term dynamic.
‘Those upsizing due to grants or savings made during the last few months will also wane.
‘In short, predictions are that the next few weeks will remain stable, as there is currently no weakness in the market.
‘However, from the end of September and into October, prices are likely to come under more pressure.’