Used car values slide 2.2% in month of two-halves
Used car values fell 2.2% in March but, in unprecedented times, it was very much a month of two-halves.
The figures from Cap HPI show that trade values compared to the previous month were only down 0.3% on Friday 13 March. But there was a dramatic effect on used car prices from Monday 16 March as demand fell amid increased coronavirus pandemic measures.
The figures also show the number of cars sold on Friday 20 March was 23% lower than on Friday 6 and 19% lower than on Friday 13 March.
The total cumulative Live movement during March, leading to April’s monthly values, was an average drop of 2.2% (-£275) at the three-year, 60,000-mile point, the majority of which happened in the final 10 days of valuing. For newer used cars, the drop was 1.8% (-£425) at the one-year, 20,000-mile point.
Derren Martin, head of valuations UK at Cap HPI, said: “As you would expect, all of the main sectors have been affected by this decrease in values. Rest assured, the movements that have been made in March have been reflective and not an over-reaction to feedback or industry ‘noise’. We are aware of reductions by some online car purchasing sites and some remarketers, but our adjustments have been purely as a result of used car transactional data.”
However, while the firm’s experts say that in the short-term both used and new car sold volumes will reduce dramatically, as the industry has already witnessed in the immediate aftermath of the country lockdown, there is the likelihood of some pent-up demand, and a shortage of new cars when the market does return to normality – boding well for prices of used cars.
Short-term valuation forecasts are predicting no change to values in the next three months. Long-term forecasts have not been adjusted, as more evidence is required and Cap says it does not make ‘knee-jerk’ reactions.
Martin continued: “We will be analysing the data as always, but not adjusting used values while there is insufficient data. In effect, if vehicles are not selling in quantities anywhere close to normal, we will not be adjusting. No overall market adjustments will be made based on historical data or opinion; outliers and unrepresentative sample sizes will not be reflected. We will be closely tracking retail volumes and prices, but not adjusting any trade values from these.
“We feel this is the sensible approach in these unprecedented times – we always have a duty to reflect the market, but at present, there is not enough of a market to do so accurately.”