Used car market strengthening, heads for first monthly increase

The used car market continued on its positive trajectory at the end of January and into early February, according to experts at cap hpi.

By the close of the first full week of January, average values had improved by 0.3%, and the market is heading for its first increase in a month since March of last year.

Commenting on the data, Derren Martin, director of valuations at cap hpi, said: “The market feels similar to this point in 2023, when Cap Live values increased by 1% during February and 0.5% in March.

"Retailers are reporting healthy demand from consumers, without breaking any records, and have the requirement to replace sold stock and to speculatively purchase again, something that was not such a clear-cut decision in the final quarter of 2023, when values dropped by over 10%.”

While trade values are on the increase on average, there are a number of nuances within the market. Electric vehicle values continue to be volatile, showing an average reduction in February of 0.9% to date.

Most EV models continue to drop slightly or remain level, and there is little strength to report as supply continues to outweigh demand. Petrol vehicles, on the other hand, are the strongest performing fuel type, with an increase of 0.7% month-to-date, remaining the go-to vehicles for consumers and retailers alike.

Price-point cars remain the strongest area, with city cars, superminis and lower medium (C-Sector) models increasing in value on average. The sub-£20k market remains the most robust, posing less risk for retailers to stock those types of vehicles confidently.

Martin concluded: “Overall, the market remains healthy, but a keen eye on the detail remains vital. Retail prices are relatively volatile, as dealers jostle to make a healthy margin and remain competitive, with large differences in trade prices being paid between October and February making the market difficult to judge from a retail perspective.”