- Used car prices have fallen around 2-5 per cent, CAP HPI reveals in video interview
- Values of cars more than five years old only being moved until June at least
- Auto Trader data meanwhile says used car asking prices are going UP
- As Motors.co.uk tells Car Dealer Magazine some dealers have CUT used car prices
CAP HPI doesn’t think it will move the values of newer used cars until June at least as volumes of trade sales are still pretty low.
Derren Martin, head of valuations for CAP HPI, has given an exclusive video interview to Car Dealer Magazine, which you can watch in full above, and reveals prices have fallen around five per cent on some models.
It comes in the same week as two of the largest used car classified advertising sites reveal a difference in opinion on just what has happened to used car prices during the lockdown.
Martin tells us how the trade valuations experts – which set values of thousands of used cars from data taken from trade and retail sales – have restarted assessing the prices of used cars again this week after a hiatus during lockdown.
CAP HPI has only been moving used car prices on models five years and older as there still is not enough trade volumes to change the prices on everything.
In the video interview, Martin said: ‘Some have gone up – very, very few have gone up. Some have dropped between two and five per cent. It’s a bit of a mixed picture out there, but in general things are moving down slightly.’
Martin said most prices have dropped around two to five per cent on those older cars – and he expects the newer used cars to fall to a similar level, but those adjustments cannot be made until the volumes of trade sales increase further.
He added: ‘There are still low levels of volumes and it wouldn’t be fair of us to move values where we are not seeing enough data. I can commit we won’t be moving values until we cut off for June’s monthly book which is towards the end of May and we won’t be moving any values under five years old before that.
‘Expect from June onwards – volumes will be at a volume where we will be confident to move them then. We expect the market to be open then. Once that happens it’ll open up the market more.
‘What happens to those newer car prices is the million dollar question and I certainly don’t want to lead the market. What you would expect in this period is values dropping around five per cent, if they dropped by about that much it is not a huge, seismic change to the market it is what can happen at this time of year.’
Car dealers in England are preparing to reopen again on June 1 after the government issued guidelines on how they can do that safely this week.
Although not confirmed for that date, dealers are confident they’ll be allowed to start selling new and used cars again from then.
Up until that point, they are offering buyers the chance to click and collect – buying online and then picking up from the forecourt in the open air.
But what is happening to the price of used cars in car dealerships?
This week, Car Dealer Magazine heard from two of the largest classified advertising sites, Auto Trader and Motors, both of whom have been monitoring what dealers are doing with their prices.
Auto Trader – the UK’s largest classified site with around half a million cars for sale – has seen prices INCREASE marginally by 0.1 per cent.
Data collected for April on the Auto Trader website – where more than 500,000 cars were advertised – actually showed the first marginal rise in prices in eight months.
Asking prices from dealers overall for used cars on the site went up 0.1 per cent with petrol vehicles rising the most, up 1.7 per cent, while diesels were down 0.7 per cent.
In another exclusive video interview with Car Dealer Magazine, the site’s product director Karolina Edwards-Smajd said the future of used car prices now lies in the hands of dealers.
[Auto Trader interview, 9:45 video]
In the interview, she called for dealers to be ‘patient and pragmatic’ and not to slash used car prices when they return to work on June 1.
She said: ‘It is encouraging to see used car values go positive overall for the first time.
‘It’s down to retailers who have been patient and pragmatic and not having a knee jerk reaction on correcting prices.’
Over at Motors.co.uk – the second largest advertising site – analysis of the used car prices of 60,000 mainstream vehicles that had remained listed on the site for the last six weeks found that dealers had 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 the eBay Motors Group, told Car Dealer Magazine: ‘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.’
Is now a good time to buy a used car?
In summary, the used car market is likely to be very volatile as dealers start to reopen – while some will need sell stock quickly others will be holding firmly on pricing.
There have been calls for dealers to not slash prices – and that is unlikely to happen. Why is that? Well, there is plenty of evidence that there is pent up demand out there which could see stocks of used cars dwindle pretty quickly.
With no new cars being sold in April and May the usual flood of part exchanges that fuels the used car market simply aren’t there so stock availability will get poor quickly.
Used car prices are determined by supply and demand – if consumers continue to want to buy used cars, and the evidence points to the fact they will, and the supply continues to be weak, prices may firm up quickly.
With public transport being avoided and even the prime minister telling people to drive instead, there could be many people shopping for used cars in the not too distant future, sucking yet more supply out of the market.
Car Dealer Magazine will continue to monitor the changing used car prices picture as it happens. Get our daily email updates here or join our WhatsApp group (below) to get the very latest.
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