The erosion of used car trade values is slowing and the market shows signs of stabilising, according to CAP Automotive.

Research from CAP’s Black Book Live real-time valuation tool during May shows the market downturn reported last month is a relatively short-term phenomenon, driven largely by increases in used car volumes.

The success of the UK new car market has brought more part-exchange vehicles back into franchise dealers, reducing their need to actively source used car stock in the open market.

A consequence of this has been reduced demand at auction, coupled with an increase in supply as those same dealers send their unwanted older part-exchanges to the block.

This is also prompting a trend of faster depreciation for older vehicles as their numbers increase, also reported by Black Book Live.

CAP believes the overall picture is positive for the market, despite the current trend of increased value erosion.

Independent used car specialist dealers and car supermarkets in particular are already benefitting from franchise dealer used car departments switching focus onto their own influx of part-exchanges, instead of competing hard for stock and pushing values up in the auction arena.

Derren Martin, Black Book Live senior editor, said: “Evidence from the marketplace shows every sign of confirming our prediction last month that the downturn in values would be short-term.

“Over the next few weeks we expect more typically seasonal downward adjustments to values as the increase in used car volumes begins to diminish.

“This is, in fact, a very positive time for both the new and used car markets in Britain. Our new car sales are the envy of Europe, franchised dealers are enjoying having to work less hard to get hold of good used cars and independent dealers are happy to see fewer franchise dealers competing with them at auction.

“Motorists, in turn, are enjoying the best new car deals since CAP began researching the market in 1979 and the growth in specialist used car supermarkets especially means greater choice than ever before.

“It is also worth reminding motorists that the appetite of independent dealers for high quality part-exchanges also means they are in a very strong position to drive a great deal on second-hand cars too.”