Used car values fell by 1.9% or c.£420 at the three-year, 60,000-mile point in September, according to the experts at Cap HPI.

Cap HPI said the market is seeing a “relatively gentle realignment, not a crash”

It’s the largest drop in the month since 2008 when values dropped by 4.1% as the financial crisis affected the market. And typically, September is a positive month for Cap Live figures.

But Derren Martin, director of valuations, said the data needed to be put into context.

“Used car values currently remain some 25-30% above where they were before those extraordinary increases in 2021. The downward movements now being experienced are a relatively gentle realignment, not a crash, and they are no longer increasing in severity – value drops have been consistent for the last three months now.”

Values at the one-year point dropped by 1.6% in the month, equivalent to c.£575, whilst older cars dropped by similar percentages, 1.8% at five years old and 2.1% at 10 years old, equivalent to -£250 and -£115 respectively.

SUVs performed the worst amongst the mainstream sectors, dropping by an average of 2.1% or just over £500, with all sizes faring similarly with their average drops.

Other volume sectors were almost in line with SUVs, with Lower Medium dropping by an average of 2.0% and Superminis by 1.8%, equivalent to c.£300 for the former and c.£215 for the latter.

In line with August, the two strongest mainstream sectors were city cars and MPVs, both dropping by a reasonable 1.1% (c.£85 for city cars, c.£220 for MPVs). Both of these sectors continue to stabilise after several months of large drops over the spring and summer. Volumes are lower for these cars as SUVs continue to dominate.

For the first month this year, EVs are the best-performing fuel type on average at three years 60,000 miles, as values have reduced by just 1.0%, in comparison to petrol and diesel cars at -2.0%.

It’s the smallest average reduction to electric vehicles in the last 12 months for Cap Live and comes against a backdrop of ever-increasing supply. Year-to-date, Cap HPI received over 30% more sold data records than in the whole of 2022, and August alone saw an increase of 82% over August last year.

Small- and medium-sized EVs are performing relatively well against the rest of the market; many of these now carry a trade value that’s “far enough away from more aspirational vehicles”, making them appear attractive in the retail market, even with a healthy margin applied. Models such as the Nissan Leaf and Renault Zoe actually increased in value.

Looking ahead to October, Derren Martin said higher volumes will hit the wholesale market, as fleet returns and part-exchanges become more plentiful from September registration activity.

He added: “There is little reason to predict that consumer demand will improve, although the recent Bank of England announcement not to increase interest rates will not hurt and is welcomed across the industry. It is likely, however, that supply will outweigh demand, and with used values still high, on average, further pressure on them is likely. An average reduction similar to that of the last three months would not be a surprise and, indeed, is widely expected.”