Used car values have slipped by a further 1.5% following October’s record drop, Cap HPI has reported.

Derren Martin, director of valuations at cap hpi

Values had already dropped 4.2% last month – which marked the largest drop in a single month since the introduction of Cap Live in 2012 and the biggest fall since May 2011.

Derren Martin, director of valuations, said the latest drop showed the reality of a fast-moving market.

He commented: “This is a market realignment, with values dropping by a cumulative 13.6% in seven months since April. It looks like November will see another reasonably large drop. However, values could also start to stabilise, particularly if dealers and car supermarkets start to stock up, with an eye on January.”

Martin added: “The market is moving quickly, and the valuations team at Cap HPI is making thousands of adjustments to vehicle values on a daily basis. Vendors and buyers must keep up to date on market movements through this transitional period.”

Auto Trader data shows retail values soften in October

Auto Trader has published its own data, showing that retail values softened in October but continue to hold stronger than trade.

Its latest figures show average used car retail prices contracted on a year-on-year basis for the second consecutive month in October, dropping 1.7% like-for-like.

But it warns that the headline figure “continues to mask a nuanced and resilient used car market, with robust levels of consumer demand and price growth still present in market segments”.

There are still robust levels of consumer demand and price growth in some market segments, Auto Trader reports

The current rate of contraction marks the largest drop in YoY prices in over 43 months – but needs to be taken in context. In October 2019, before the unprecedented market forces unsettled all “normal” pricing patterns and catapulted average prices upwards, retail values also contracted at the same rate of 1.7%.

And by comparing average prices in October 2023 (£17,641) with previous years, it’s evident just how strong used car prices remain and how fast they have increased; average values are up £3,627 on the same period in 2020, and a massive £4,308 on pre-pandemic 2019.

Auto Trader says the used car market remains crucially resilient. Its proxy sold data suggests transactions were up circa 2% YoY in October. Speed of sale is also robust, ahead of prior year levels at 29 days (versus 30 in October 2022).

And its data shows that whilst used car supply into the market is beginning to pick back up, with current levels up 2.3% on October 2022 (the highest rate of growth in 12 months), it remains below the levels of consumer demand growth, which is up a healthy 6.8% YoY.

To further highlight the robust demand in the market there were 74.3 million visits across Auto Trader’s marketplace last month, which is nearly 6.4 million more than in October 2022.

Elsewhere, the data shows that younger vehicles and EVs are holding the headline figures back. In October, the average price of cars under 12 months old fell 3.5% YoY (£35,939), and those aged 1-3 dropped 7.6% (£26,132). But the average price of cars aged 10-15 years-old (£6,655) recorded a huge 9.6% YoY increase in October, whilst those over 15 years (£5,561) were up 6.4%. The middle of the market remains stable, with the average retail price of those cars aged 5-10-years-old up 2% YoY and flat MoM.

Such a softening in younger vehicle values is due both to increasing consumer offers now being widely available for the first time in nearly three years on equivalent brand-new cars, and to increasing supply following improved new car sales over the last 14 months.

It’s also been intensified by the increased supply of young electric vehicles entering the market, driven by the ongoing de-fleeting of the circa 750,000 sold over the last three years. In October alone, supply of EVs under a year old on Auto Trader was up 48.1% YoY, and with the average values of EVs within this segment down 11.4% YoY, it’s dragging the overall price for younger cars down.

Used EV prices across all age groups (£31,787) were down 20.5% YoY in October, improving on the 22.1% drop in September and the 22.6% in August, showing the continued recent strengthening of the used EV market context. Prices also fell on a MoM basis, albeit by just 0.3% and by the second lowest rate in over 12 months.

This is due to very strong growth in consumer demand for second-hand electric cars, which is being driven by an enticing combination of better affordability (with many models reaching price parity with their ICE counterparts) and greater availability.

Auto Trader’s director of data and insights Richard Walker said: “Although October marked the second month of contraction in headline figures, as always context is important. Transactions are stable, consumer demand is robust, engagement is increasing, cars are selling quickly, and there are still segments of the market recording strong price growth.”