Used values dip in October
The latest analysis from cap hpi shows that used values dipped by 2.1% in October, marking the first fall since March.
Wholesale sold prices fell across the board as trade buyers became more reluctant to pay high prices for cars.
Derren Martin, head of valuations UK at cap hpi, said: “In October the trade market moved sooner and quicker than the retail one, making it difficult to follow the market decline, for those that price purely off advertised prices. If trade prices are on the decline, live, daily values based off wholesale data are essential for vendors and buyers alike, so as not to get caught off-guard with pricing.
“The market appears to now be undergoing some realignment. There are several factors at play. Values do tend to drop in the final quarter of the year, by varying degrees, as demand drops away in the run-up to Christmas and supply levels usually increase. We do appear to be experiencing that drop off in trade demand, but it is exacerbated this year by economic uncertainty, high prices and reasonable predictions that the consumer appetite for used cars that has driven up prices cannot last forever.”
Meanwhile, the supply of electric vehicles being offered in the used wholesale market continues to grow; year-to-date disposal volumes have increased by around 20% over the same period last year. While there is no doubt that there is a demand for used EVs, an increase in supply and the premium they attract over a petrol or diesel vehicle still acts as a barrier to the mass market.
Martin concluded: “2020 has been completely different from any other year in history and that includes what has happened to values of used cars, rising against all expectations. It is particularly difficult to predict what may happen, with so much uncertainty due to localised lockdowns – whether or not car retailers can sell and deliver cars in Wales remains a grey area at the time of writing.
“Whilst trade volumes are not as high as in previous years due to lower than normal registration volumes, and leased vehicles are still on extensions, plus new car supply issues, it is still highly unlikely that demand for wholesale stock will overtake supply for the remainder of the year.
“As a result, with values remaining higher than they were a year ago, by over five per cent on average despite the recent Live drops, we are forecasting that values will continue to drop in November.”
