Dealer demand for BEVs exceeds petrol in August amid strong used car market stability

Strong wholesale demand supported used car values in August as the average value movement fell by just 0.6% at the three-year age point, according to experts at Cap HPI.

The seasonal norm for August is a decline of 0.7%. The last four months have proven notable due to the robust market performance.

Values have dropped by an average of just 0.5% per month and 2.0% in total. 2018 was dubbed ‘the year of the used car’ due to market strength, but even in that year, values dropped by 3% over the summer.

BEVs continue to increase their desirability amongst retailers, with a notable improvement in auction conversion rates. The current average is 1.3 sales attempts, while petrol vehicles have an average of 1.5 sales attempts before selling.

Commenting on the market, Derren Martin, director of valuations of cCap HPI, said: “The reduction of prices in the final quarter of last year took some of the necessary heat out of values that had been prevalent since the increases of 2021, but without returning them completely to where they were.

"It seems used car prices reached a fair level for retailers and consumers at the start of 2024, and as a result, they have been largely stable ever since. There are nuances within this, and where supply outstrips demand for certain models and fuel types, values have fallen, but as an average, used car prices have experienced a stable year thus far.

Inventory levels

“With the retail market remaining robust, there has been continued healthy demand for retailers to replenish their stocks, particularly as they have kept inventory levels low due to the increased costs of stocking. Indeed, the main challenge has been finding enough cars in the right condition, price-point and at the preferred age and mileage. Limited supply, along with steady demand, is helping to keep prices robust.”

At the one-year age point, values also dropped by an average of 0.6% (c.£250), with older ages slightly more affected in percentage terms, 10-year-old values dropping by 2.1% on average, or £85.
 
MPVs have dropped more than the other mainstream sectors, at -1.3% on average. However, these movements are similar this time in previous years and certainly not seismic.
 
The main volume sectors of lower medium (C-Sector), supermini, and SUV, which make up over 75% of the sold trade data received so far this year, all dropped by around the 0.5% mark, illustrating the stability in the market even where there is volume.
 
Pure hybrids were the best-performing fuel type over the last month, dropping by an average of just 0.2%, proving that the halfway house to going fully electric remains popular. Petrol cars dropped by just 0.6% on average.

EV value drops
 
EVs decreased by an average of 1.0% (c.£240), and plugin hybrids experienced a similar decline. BEVs have now experienced a full two years of monthly value drops, although the rate of decline has certainly slowed.

Since September 2022, BEVs have seen their used values decrease by over 60%, making them far more affordable and desirable for retailers to stock. The current situation is mixed; however, a number of electric models have experienced an increase in values. The Audi Q4 E-Tron Sportback, Ford Mustang Mach-E, MG5, Nissan Leaf, Peugeot e-2008 and the Tesla Model S all went up at the three-year age point.

Martin concluded: “As we approach the final quarter, there may be some trepidation due to the large realignment of last year, with values dropping by an average of 10.5% from October to December 2023. It is highly unlikely that there will be a repeat in 2024.

"There will not be the same high volumes of defleets all at the same time, interest rates are more stable and cost-of-living concerns less prevalent, meaning less of a drop in demand. Flies in the ointment can always appear, and the new car market will be one to watch.

"However, if manufacturers deliberately reduce sales of ICE cars to assist with their ZEV mandate targets, this could make similar used models more desirable. Responsible remarketing is also key to ensuring a stable market.”