7:04 am, December 22, 2023
Used car prices in 2024 are likely to begin to stabilise after the dramatic drops seen in the last three months.
Revealing a 2.1% fall in trade used car prices for December, Cap HPI director of valuations Derren Martin gave Car Dealer his prediction for the year ahead.
The December fall means trade used car prices have now dropped 10.5% in the last quarter of 2023.
Speaking to Car Dealer in an exclusive video interview (above), Martin said the December figures were among the worst on record, but are still a significant improvement on the preceding two months.
Martin said: ‘We had a 2.2% drop in 2014 and December tends to be a month where values do drop, but not by this much.
‘So it’s still a reasonable drop, but I’m looking at it more on the positive that it’s been less than it has been over the last two months.
‘We are seeing this as a stabilisation and we do think there’s going to be, now, a gradual improvement – values now look more reasonable.
‘They’re still above where they were prior to those 2021 increases, on average, by about 13%.’
December’s trade values have been boosted by the fact many dealers have started buying again at the lower prices.
Martian explained they had cut their losses on the used cars they had in stock at the higher prices and his teams have seen many are out buying again.
He said: ‘We’ve definitely seen dealers are dipping back in, but no one’s going out and overstocking.
‘In previous years, you’d have dealers that were stocking up for January sales and really going for it. But there’s still a degree of sort of pragmatism at the moment – they’re being a little bit careful.’
Biggest used car price drops
Source: Cap HPI, December 2023
- MG HS Hybrid -£1,925 (11.4%)
- Seat Leon Hybrid -£1,422 (9.7%)
- BMW 4 Series Convertible Diesel -£1,506 (8.8%)
- Citroen C5 Aircross Hybrid -£1,325 (7.9%)
- Cupra Formentor Hybrid -£1,587 (7.9%)
- Renault Megane Hybrid -£1,175 (7.2%)
- Dacia Logan -£529 (7.0%)
- Skoda Scala -£797 (7.0%)
- Jaguar XJ Diesel -£1,900 (6.9%)
- Fiat 500C -£645 (6.9%)
What will happen to used car values in 2024?
Martin talked about what will happen to used car prices in 2024 during the interview and predicted a ‘year of two halves’.
‘I’ve not spoken to a single dealer that isn’t optimistic about January,’ he said.
Martin said a combination of many factors could impact used car prices next year including manufacturer activity pushing new cars – especially EVs to hit their ZEV Mandate targets – which will drive part exchanges and fleets buying up new stock and shedding their old into the market.
He said: ‘We think that values will continue to drop but not by as much.
‘We’ll see a stabilisation, or gradual stabilisation, so if it was 4.2% last month, 2.1% this month, then maybe a 1.5% drop in January.
‘It will then slowly improve as we head through the year. There are 2.5m less cars than there would have been if it hadn’t been for semiconductor issues, Covid, all of those sorts of things.
‘So, as we move through next year, we think that values will continue to drop.
‘It might be a bit of a tricky first half that continues to see some small drops, but as we get through that and into the second half of next year, we’re kind of calling it a game of two halves.
‘We think the back end of next year could be stronger and you could actually see values going back up again.’
Biggest used car price rises
Source: Cap HPI, December 2023
- Mazda 2 +£377 (3.9%)
- Suzuki S Cross +£366 (3.0%)
- Volkswagen Polo Diesel +£150 (1.1%)
- Dacia Duster Diesel +£125 (1.1%)
- Jaguar F-Type +£260 (1.0%)
- Ford Galaxy Diesel +£220 (1.0%)
- Jaguar F-Pace Diesel +£282 (1.0%)
- Land Rover Range Rover Velar Diesel +£261 (1.0%)
- Mercedes-Benz CLA Class Coupe +£198 (0.9%)
- Kia Stonic Diesel +£100 (0.9%)
The December 2.1% drop in trade values equates to an average of £375 across the used car market. Cap HPI called it a ‘return to normality’ in its editorial to dealers.
Martin said the fuel type hit the worst in December was hybrids, down 2.7%, while EVs fell 2.3%. Petrol cars fell by an average of 2.1% and diesels by 1.9%.
Five of the top 10 biggest falling used cars were hybrids with the MG HS top, dropping 11.4% in December or nearly £2,000.
Unlike last month, there were at least enough cars rising to make a top 10 with the Mazda 3 gaining the most at £377 which equated to 3.9%.
To watch the full interview – where Martin also gives his thoughts on whether used car dealers are cutting their prices too much – click on the video at the top of this post.
