Used car price falls levelled out in January as the motor trade and consumers headed back to the market, latest figures reveal.
Cap HPI says used car prices dropped just 0.1% in the month after falls of 10.5 per cent shocked the industry in the last quarter of 2023.
In a video update (above), Cap HPI director of valuations Derren Martin explained there was some definite ‘strength’ in the market.
‘There are plenty of cars being bought and sold,’ he said.
‘There’s been some good consumer activity and the retailers are all pretty buoyant.
‘The headline figure is a 0.1% drop which is less than £100. At the start of the month we were heading towards a 0.5% drop and at one point it was more like a 1% drop, but around the 10th or 11th of the month it reversed and, if we’d had another couple of days before our deadline, it would have probably turned positive.’
The marginal drop is in line with the usual for this time of year. Cap HPI said the average fall over the last 12 years has been 0.3%.
‘I think everybody was hoping it would be good in January and we thought there’s no reason why January won’t be good,’ explained Martin.
Martin said he had been forecasting a 1% fall in values and said the strength ‘has taken us a little by surprise’.
Diesel and petrol cars were the best performing fuel types – both up an average of 2%. Electric vehicles dragged the numbers down with a fall of 1.8% with hybrids registering the same percentage fall.
‘It is the electric vehicles that continue to be a sort of volatile, really mixed picture,’ he added.
‘Some, like the Renault Zoe, have stayed level but other like the Audi Q4 e-tron have dropped 4%.’
There was particular strength in city cars, superminis and lower medium sized cars especially at the cheaper end of the market, explained Martin.
Martin said the firm was also beginning to notice some weakness with the prices of Tesla Model Y again as the manufacturer targets this for its new sales, but the Model 3 was holding firm and ‘looking great value’.
Looking ahead, Martin said he wouldn’t be surprised if used car values actually went up in February.
He added: ‘Last year, values went up in February by about a percent and I wouldn’t be surprised if that happened again.
‘They went up again in March by about half a percent. So, these could be negligible movements – we’re not having another 2021 – but equally I don’t think we’re going to see a sharp decline, like we saw at the back end of last year.
‘I think there could be some small movements. There’s no reason to believe that the market isn’t going to stay strong, and that consumers are going to continue to buy, especially if we see interest rate drops and things like that.’
Martin said March could be a ‘watershed’ especially if there are strong new car registrations with a lot of incentives to encourage new car buyers, especially into EVs as manufacturer looks to hit tough targets.
‘There could be a lot of volume coming in April, and then the market might start to weaken as you hit holiday periods, bank holidays, that type of thing,’ added Martin.
‘But I think, for the time being, I certainly say it’s going to be positive. No reason to expect otherwise.’
Auto Trader CEO Nathan Coe spoke to Car Dealer last week about his thoughts on the start to the year and his predictions for 2024. You can watch that interview here.