Used car values see first upward movement in February

Used car values in February saw a modest increase of 0.4%, equivalent to £40, at the three-year, 60,000-mile benchmark, according to data from Cap HPI.

The data was driven by a resilient retail market that has continued to support the wholesale sector, leading to largely positive trading conditions.

Conversion rates stayed strong from January into February, consistently averaging between 70% and 80%.

In some instances, sales exceeded these levels, with certain vendors, particularly in fleet sales, regularly achieving 100% conversions.

Dealer and part-exchange sales also performed well, reinforcing the high level of engagement from buyers.

Car supermarkets, independent retailers, and franchise dealers remained highly active, a positive indicator for this time of year.

Chris Plumb, head of current car valuation at Cap HPI (pictured above), said: "With ongoing uncertainty in the new car market, particularly as private registrations remain subdued, some franchised retailers are placing greater emphasis on expanding their used car operations and strengthening their aftersales business to mitigate potential revenue pressures, which in turn increases competition for vehicles through wholesale channels.

"The result has been upward pressure on values in recent weeks, marginally above the seasonal norms.

“The value movements reinforce a continued market focus on price-sensitive stock—vehicles that offer an attractive upfront cost or lower monthly finance payments.”

Biggest gains on sub-£5k segment

February saw the first upward movement of the year, with the average seasonal movement being a small increase of 0.3%.

Since the introduction of Cap Live in 2012, there have been only three instances where average values dropped marginally (2017, 2021, and 2022).

When analysing by price band, the most significant gains in percentage terms were seen in vehicles priced up to £5,000, which increased by 1.8% (£60), followed by a 1.3% (£90) rise for those between £5,000 and £10,000, and a 0.7% (£85) increase for models in the £10,000 to £15,000 range.

All other price bands recorded increases, except for vehicles priced between £30,000 and £50,000, which remained stable at a slight drop of 0.1% (£60), and those over £50,000, which saw a slight drop of 0.2% (£160).

At one year old, values edged up slightly by 0.1%.

With manufacturers offering enhanced discounts to entice buyers, it’s no surprise that values have remained steady, though variations exist across different fuel types.

Strong new EV offers putting pressure on nearly new market

Used BEV wholesale volumes continue to grow, with record month-on-month and year-on-year increases.

However, rising supply puts pressure on specific models, and attractive new car offers further influence the market, making new BEVs more appealing than their nearly new counterparts.

In many cases, the monthly PCP payment on a brand-new BEV remains lower than that of a used model, limiting the demand for younger second-hand examples.

Used BEV values have declined across all the age and mileage profiles. At one year and 10,000 miles, values dropped by 1.6% (£540), while at three years and 60,000 miles, the decline was also 1.6% (£350).

Five-year-old BEVs saw the steepest drop at 2.2% (£400).

Plumb concluded: “With the arrival of the new ‘25’ plate from the 1 March, we anticipate increased volumes within the used car market as fleet returns and part-exchanges filter through. At the same time, manufacturers are offering competitive new car deals —particularly on BEVs— as they push for market share and work towards their VETS targets. However, any impact on used values is unlikely to be felt until April at the earliest, and even then, any downward pressure is expected to be moderate.

“Cap Live values will continue to adjust beyond the monthly deadline, with further refinements expected in the final days of February and into March. In a fast-moving market, monthly figures can quickly become outdated, making real-time tracking of trade values essential for staying ahead of trends.”