Used car values are down by 1.9 per cent this month – the biggest drop of the year but there’s nothing to worry about.
That’s according to Cap HPI, which says there is some seasonality at play.
Speaking to Car Dealer associate editor James Batchelor for our monthly look at used car values in the trade sector, Derren Martin, director of valuations at Cap HPI, said July had proved to be ‘a bit of a tricky month’.
He commented: ‘We’ve spoken to some dealers who are a little bit disappointed with their performance. I don’t think anyone is overly stocking up at the moment.
‘We’ve had a value drop this month of 1.9 per cent, which is equivalent to about £350. That’s at the three-year point.
‘But it does feel a little bit seasonal – more like a return to pre-Covid times.’
Martin said there was ‘nothing massively untoward’ about the drop, although the 1.9 per cent drop was slightly above the norm for a July and the largest drop so far this year.
He told Batchelor there wasn’t any cause for concern about falling values as 2023 was still the fourth strongest-performing year over the past 10 to 12 years, and he labelled it ‘a little bit of a realignment of values’.
Martin added: ‘It’s not like a crash or anything ridiculous like that is coming.’
Factors included people going on holiday, fewer people buying, plus dealers having an eye on September and the plate change, so nobody was overstocking.
‘I can’t paint a positive picture, but I’m certainly not painting a negative picture.’
The point was also made that the drop-off had been gradual and that used car prices are still a lot higher than they were pre-Covid – Martin said values were up nearly 30 per cent on average from where they were three to three and a half years ago, with some cars 70 per cent ahead of where they were.
Drilling down into the figures, Martin said hybrids had dropped by 2.1 per cent but EVs had fallen by 2.8 per cent on average.
He added that dealers were being wary when it comes to EVs and not overstocking. ‘I would be dipping my toe in, not overdoing it.’
Looking ahead to August, Martin predicted that prices would slip again but not to a massive extent.
‘August tends to be a month where values drop only slightly. I think we might see another one and a half per cent, something like that.’
He added: ‘I personally think we’re going to have some small realignment again of values, but nothing untoward and pretty much a continuation of a theme, really, from the last couple of months.
‘And I think that might continue for a while – you’re going to get more volume coming back in September, which could affect the market.
‘Interest rates are high, fixed-rate mortgages coming to an end, people are wary, but obviously the necessity purchase of a used car will still be there. So I think overall values will drop again, but nothing horrendously.
‘But cars are more expensive than they were three and a half years ago and they’re not going to get back down to those levels, so we should just sort of embrace what’s happening in the market.’
Top five biggest fallers of July (3 years/30,000 miles – Cap HPI)
1) Smart Fortwo cabriolet (17-20) electric
Percentage drop: 14.7
Value drop: £1,508
2) Citroen C-Zero (11-19)
Percentage drop: 10.8
Value drop: £925
3) Suzuki Swace (20-) hybrid
Percentage drop: 8.0
Value drop: £1,350
4) Smart Forfour (17-20) electric
Percentage drop: 7.9
Value drop: £725
5) Toyota Prius+ (12-21) hybrid
Percentage drop: 7.8
Value drop: £1,383
Top five biggest risers of July (3 years/30,000 miles – Cap HPI)
1) Infiniti QX30 (16-20) diesel
Percentage rise: 6.6
Value rise: £1,030
2) MG3 (18-)
Percentage rise: 5.1
Value rise: £393
3) Mercedes-Benz E-Class (16-) petrol-hybrid
Percentage rise: 5.0
Value rise: £1,360
4) Volkswagen Caravelle (10-20) diesel
Percentage rise: 4.9
Value rise: £1,737
5) Microcar M.Go (09-20)
Percentage rise: 4.7
Value rise: £168
You can watch the video of our interview with Derren Martin at the top of this story.
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