2:54 pm, October 27, 2023
Used car prices have plummeted a worrying 4.2% in October following a ‘significant’ shift in the market.
Speaking exclusively to Car Dealer, Derren Martin, director of valuations for trade used car pricing experts Cap HPI, said the fall is the biggest drop since 2011.
The drop is the biggest EVER recorded in October by the valuations firm while monthly falls of more than 3% have only ever happened on three other occasions.
Martin described the fall – which equates to an average of £850 lost on each used car – as a ‘significant realignment’ but he stopped short of calling it a ‘crash’.
Last October, used car prices fell just 0.5 per cent.
Speaking in a special video, which you can watch above, he said: ‘There’s more cars out there and there’s less demand.
‘Dealers we’re speaking to say they are picking off cars, they’re replacing cars that they sell, but they are not stocking up.
‘We haven’t spoken to a single dealer that is stocking up. So when you get more supply, and only selective buying, that obviously affects prices.’
All fuel types – petrol, diesel, hybrid and electric – dropped in price in October, with EVs the best performing of them all, dropping 2.4%.
Biggest used car price drops
Source: Cap HPI, October 2023
- Mitsubishi ASX – -13.4%
- BMW 2 Series Convertible diesel – -12.3%
- Skoda Karoq – -11.5%
- Vauxhall Grandland X petrol hybrid – -11.5%
- Jaguar F-Pace diesel – -11.4%
- Suzuki Vitara – -11.4%
- Vauxhall Grandland X – -10.8%
- BMW 2 Series Convertible – -10.7%
- Mazda MX-5 RF – -10.7%
- BMW 4 Series Convertible – -10.6%
‘The magnitude of the drop has been a surprise,’ admitted Martin.
‘Values have been dropping every month since April, but that has been around 2% for July, August and September.
‘We thought this month would be around 3%, but there’s definitely been a sort of a rapid acceleration over the last two to three weeks, where prices have dropped more than we thought.’
Martin is now predicting similar falls in November and December, until the market ‘resets’ in January. And he thinks next year could be a ‘game of two halves’ for used car prices, with a tough start.
Describing the rest of the year as ‘tricky’ Martin said car dealers have not been afraid to cut used car prices to stimulate demand.
He added: ‘I think at the moment, vendors in the trade market are being realistic, and they know that they may have to drop their prices to sell.
‘There is another side of it and that’s even if they drop their prices, then I don’t think that’s going to stimulate demand.’
Biggest used car price rises
Source: Cap HPI, October 2023
- Dacia Logan diesel – 6.9%
- Seat Mii electric – 4.0%
- Toyota Prius – 3.9%
- Mazda MX-30 electric – 3%
- Alfa Romeo Giulietta diesel – 2.7%
- Subaru Outback – 2%
- Hyundai i30 diesel – 2%
- Nissan Leaf – 2%
- Mini Countryman hybrid – 2%
- Renault Zoe electric – 1.9%
Martin said dealers need to ‘batten down the hatches’ until at least January.
He said a combination of the cost of living, people looking ahead to expensive winters with rising energy prices, inflationary pressures and interest rate rises have all combined to hit consumers’ spending power.
He said few are buying cars as discretionary purchases and the market is being held up by those who need a car, rather than simply want a new one.
Looking ahead to 2024, he added: ‘We do still think it’ll be relatively strong next year. But it could be a game of two halves.
‘It could be a bit of a tricky start with a lot of volume around, but then further into the year, you’ve got those shortfalls of those three year old cars, so I think it will pick up as we head through next year.’
You can watch the full video interview where Martin goes into more detail below.
