7:57 am, June 28, 2023
Used car prices have fallen 1.4 per cent in June as the drastic drops in electric vehicle values begin to ease.
Speaking exclusively to Car Dealer Live in a video interview above, Cap HPI director of valuations Derren Martin said the drop is slightly ahead of the average fall in June of 1.2 per cent.
However, he pointed out that despite that there was ‘definitely no price crash coming’ and added the prices will now remain at this new level and fall gently from there.
He put the drop – which compares this month’s prices of three year old cars to last month – down to a combination of the market ‘getting back to normal’ coupled with the hot weather turning people’s attention away from car buying.
He said: ‘There’s not enough supply [of used cars] to cause a crash and demand won’t be that bad.
‘Yes, people will be focussed on paying their mortgage with rising interest rates, but cars are important to people too – there’s no crash coming.
‘I feel a bit like Michael Fish in 1987 every time I say that, but really there is no crash coming. Values are still 30 per cent ahead of where they were in 2021 and they are coming down gently.
‘Supply levels are well down on where they were pre Covid and since then we’ve lost 2.5m cars from the market.
‘We’ve set a new level for used car values and there will be some downward movements, that’s what happens, but we’ve set a new level for them to come down from.’
Cap HPI’s reported fall in trade used car values is at odds with the 0.3 per cent rise witnessed for retail used car prices that Auto Trader revealed last week.
Martin said there was often a slight disconnect between trade value falls and the asking prices of used cars on dealer forecourts and he expected retail prices to fall in line soon.
‘June average prices were 1.4 per cent down for three year old cars, but older stuff at 10 years old was down 2.6 per cent,’ explained Martin.
‘We’re hearing dealers don’t want to buy work for the cars to be sitting in their workshops and as we’re in a period of deflation they will be losing money while they’re in there.
‘So good clean cars in nice condition are selling well in the trade and retailers are doing ok with them.’
Biggest June used car price drops
Source: Cap HPI June data, compared to May
- Toyota Prius -9.6%
- Kia Soul electric -9.5%
- Seat Mii electric -8.8%
- Nissan eNV200 -7.9%
- Honda E -7.9%
- VW Golf hybrid -7.8%
- Lexus UX electric -7.8%
- Hyundai Ioniq electric -7.1%
- Alfa Romeo Giulietta diesel -7%
- Renault Scenic diesel -6.9%
Petrol and diesel cars fell at the same rate during the month, dropping 1.3 per cent.
It was hybrids that really suffered, though, falling 2.3 per cent – the worst performing category of the month.
Martin said the fall in values of electric vehicles – which have now dropped 40 per cent in just nine months – is beginning to taper off with a 1.9 per cent drop in June.
Martin explained that it was still a very mixed picture for EVs with some – like the Tesla Model 3 – even rising in price.
He said: ‘The electric vehicle fall is above average but it’s also the lowest drop we’ve had this year. These drops are getting less and less each month.
‘The Honda E dropped eight per cent in the month and the Renault Zoe five per cent, but Teslas have performed quite well with the exception of the Model Y which fell two per cent.
‘We’re starting to see a hockey stick to prices with them coming back up gently. They’re not going to go back anywhere near where they were, but they have recovered.
‘The Model 3 is just a very reasonably priced car now that dealers are buying and putting on their forecourts because consumers will buy them.’
Biggest June used car price rises
Source: Cap HPI June data, compared to May
- Mitsubishi Mirage 5.1%
- BMW M4 Convertible 5.1%
- BMW 6 Series GT 5%
- Mitsubishi ASX 4.9%
- Mazda CX-3 4.4%
- Tesla Model S 4%
- Toyota Corolla 3.9%
- Audi A6 3.9%
- BMW i8 3%
- Mercedes C Class Cabriolet 3%
Martin said the fall in June was the market heading towards ‘normality’ and the market moving back into more regular patterns following the interruptions of Covid which skewed data.
Looking ahead, he added: ‘I think it’s going to be more of the same. I think, hopefully, the car market quite likes stability.
‘I think we’ll see drops over the next couple of months that have been similar to what we’ve seen over the last three months, which have been in and around that sort of one to one and a half per cent.’
You can watch the full interview at the top of this page and subscribe to our YouTube channel to be notified of more videos like this when they’re published.
