Used values have dropped up to 4% month-on-month with some mainstream cars having £500-£1,000 knocked off their value as the used car market goes through a ‘market correction’.

Cap HPI says some mainstream cars have had £500-£1,000 knocked off their value for the month to date as the used car sector goes through a ‘market correction’

The fall, which is dependent on sector and age, has seen used values for a three-year-old car drop by more than £300 for the month to date while a one-year-old car has dropped by more than £350.

The data also shows the lower medium sector at one year is down nearly 3% during May or £400 while the supermini sector at three years is down over 3.5% in May or £275.

Commenting on the acceleration in the market fall, Derren Martin, head of UK valuations at Cap HPI said: “The reasons for this are a realignment of values after some unprecedented strength in the market, which resulted in increasing or stable values in 2017/18. Cars will naturally deflate in value, but this hit seems to be all happening over a short period.

“We are advising all our customers to keep a close eye on values in real-time with our Live product. The market is moving quickly, and I can’t think of a time in recent years where current data will have such an impact on profitability.”

His comments come as BCA data for last month shows average values fell 4.6% compared to March 2019 while the year-on-year figure was down 3.5%. Meanwhile average fleet & lease values in April were down 1.2% on March 2019 but up 2.4% on April 2018.

Stuart Pearson, COO BCA UK remarketing, said of the firm’s figures for April: “As predicted last month, the seasonal run of public holidays over the Easter period and into May has put pressure on the market at a time when supply is typically plentiful.

“Buyers have been particularly cautious as we’ve seen values shifting on an almost weekly basis since the start of April. Based on the sustained increase in values over many months, some realignment is therefore not unexpected and isn’t unusual for this time of year.”