3:15 pm, August 27, 2024
Used car prices slipped by just 0.6% in August, pointing to a very stable second-hand car market, Cap HPI has told Car Dealer.
Speaking on Car Dealer Live, Cap HPI’s director of valuations Derren Martin said the 0.6% drop – equivalent to around £140 on a three-year-old car – shows the month performed to seasonal trends, and that demand is currently strong.
‘August was in-line with seasonal normality, but what’s different is that we’ve had this strength since May,’ he said in the video posted at the top of this story.
‘We’ve only dropped values in over a four-month period by 2% in total, so this drop is a really, really small movement overall.’
He continued: ‘We’re finding demand from retailers is quite strong and their demand from consumers hasn’t dipped away too much with the holiday season. Some dealers are telling us that August was actually stronger than July, which is quite unusual.
‘Many dealers are now replenishing stock. They haven’t overstocked in the past because of interest rates, but now they’re dipping back into acquiring stock and discovering that there aren’t many three-year-old prime stock cars around because of the semi-conductor crisis three years ago and Covid in 2020.
‘There were two years of low registrations and that’s kind of coming home to roost now in the used car market.
‘It’s a very stable market, because supply levels are not too high and demand is still there. So it’s just keeping things nice and steady.’
Petrol cars, particularly superminis and family hatchbacks, continued to shift easily off dealers’ forecourts in August, and prices of diesels held firm and sold well, too.
‘The interesting part is that under-£20,000 EVs are selling well and quicker than petrols in some instances,’ he said.
‘EVs are selling quickly off forecourts and we see bigger margins.
‘Our analysis shows that less than 20% of independents have advertised an EV over the last six months, so there’s 80% that aren’t stocking and advertising them – they’re really not dipping their toes in. And we’ve see less than half of franchised dealers have advertised an EV too, so there’s a lot more out there that could be done.
‘We’ve already seen more EVs sold this year than in the whole of last year in the trade market. There’s a big opportunity for dealers that aren’t stocking them at the moment.’
Looking ahead, Martin said September will be steady but there could be some volatility in in the market towards the end of the year as the ZEV mandate begins to bite.
‘We think September will be stable – last year values dropped by 10.5% in October, November and December, but we don’t think that will happen again.
‘But once you start mandating stuff to an industry it causes volatility, and it can cause volatility in the used market. I think there will be some price realignment as there generally usually is in Q4, but it will be nowhere near as much as last year.’
