Fall in used car values is direct result of lockdown, says Cap HPI
Values for three-year-old cars fell 1.4% during January; an anomaly that was the direct result of the pandemic, according to Cap HPI.
Although many retailers reported that business seemed brisk despite the national lockdown, values in Cap HPI’s Live product dropped by an average of 1.4% or £150, at the three-year point during January. This directly conflicts with the usual seasonal trend for January, which sees values remain steady as demand increases.
Cap said that retailers are seeing business levels at between 50-70% of January 2020 levels and the volume of cars sold through trade channels have been at around 60% compared with January last year.
Head of valuations Derren Martin commented: “Our live trending evidence shows the used car market is certainly open for business, but at a reduced level to ‘normal’ times. With ‘click & collect’ and ‘click & deliver’ still permitted, consumers are still purchasing, albeit to a lesser degree than previous years because of the Government’s advice.”
Confirming that the pandemic was directly responsible for the fall, Martin continued: “With many buyers on furlough and dealers all stocked up from December, in preparation for January, we now see retailers in less of a mood to buy as their stock isn’t flying off the forecourts in the quantities seen last year and there’s less of a need to dip into the trade to replenish it. Uncertainty over when this lockdown will end and what happens immediately following that has also dampened their enthusiasm.”
MPVs in particular have been hard-hit and values have dropped by 2.2% or c.£250; a trend that has been happening since October as such vehicles are required less now with the need for social distancing. Instead, the pandemic has reinforced the ongoing trend for drivers to switch preferences from MPVs to SUVs. This is further illustrated by the fact that values for the Ford Galaxy, Seat Alhambra and Vauxhall Zafira have all dropped by more than 4%.
The Cap data also shows that prices of electric vehicles and hybrids also remained under more pressure than their petrol and diesel equivalents, due to supply levels increasing and an unwillingness by consumers to pay the current premium that these are currently advertised for, over the more traditional fuel-types.
In contrast, average values have increased on cars over 10 years old, particularly in the sports car market due to consumers using money saved over the pandemic and looking for an aspirational vehicle to “lighten some of the gloom”.
Martin concluded: “Our live data feeds show there is plenty of fluidity in market values across all segments and whilst the used car market and used car dealers have proved themselves to be a robust part of the economy, prices are not immune to the dynamics of supply and demand, despite remaining open for business virtually.
“We may well see more of the same until we receive clarity on when lockdown 3 is likely to end.”