Used car prices drop by 0.6% so far, says Cap HPI

Average used car prices have dropped by 0.6% so far this month and a total drop of 1.2% is expected for May, according to Cap HPI.

Derren Martin, Cap HPI director of valuations gave AM an exclusive mid-month update, where he explained some of the key trends that are rolling in from the company’s trade data.

The 10 year old market has recorded slightly higher downward pressure so far this month with a 0.9% drop compared to the total average decline.

Martin described the current situation with values as a “plateauing effect”.

He said: “If you’re forecasting forward you’re looking at a 1.2% drop for May. 

“If you look back at history, the month of May usually shows a 1.7% drop over the last 10 years.

“Even though it’s a drop in values for May in 2023, it’s still on the stronger side. We’re hardly eating into the rise in used car prices that were recorded last year. Values are still really high compared to where they were two years ago.

“There’s nothing untoward or used car value crash on the horizon because there simply isn’t the volume of vehicles out there for that to happen.”

EVs values continue to drop more than ICE

Electric vehicle (EV) values are still dropping in May, with a fall of 2.3% so far this month compared with petrol and diesel.

Martin said the picture on EV values is still quite mixed and highlighted some standout vehicles that have dropped more than the average.

This includes the Peugeot e-208 which has dropped by 7%, the e-2008 which is down by 6%, the Vauxhall Corsa Electric, which is down by 5% and the Mustang Mach-E, which is down by 4%.

Despite the recent price reductions for Tesla, the Model 3 prices are stable so far in May, only dropping by 1%.

Martin said: “Some of those examples are part of realigning because they’re cheaper than the Model 3, but because the pricing on Teslas has dropped quite a lot in recent months, the pricing is closer than it ever was.

“Once you take monthly pricing into account maybe you can get a Model 3 instead of a Corsa and it potentially opens up more EV customers to more aspirational vehicles for their budget.”

UK used car market in good health

Martin said that while recent SMMT reports of continued growth in the market shows it is in good health, there is still an issue with supply.

He said: “Even though new car supply has improved on last year, it’s still lower than 2019.

“There’s still not enough cars in the market to oversupply the used car market. Supply is improving and demand is OK. That’s why we have this parity situation.

“Volumes aren’t anywhere near where they were pre-Covid.

“Last year used volumes were probably 20% down compared with pre-Covid and now they’re more like 10% down.”

Martin said dealers are now dipping their toes back into the used EV market, but there are examples of equivalent EVs that are “quite a bit cheaper” than their petrol or diesel counterparts.

He said: “The reluctance to stock EVs isn’t necessarily to do with prices, but it’s more to do with looking at consumer demand for used EVs and then the scare stories over the last few months on charging points, the cost of charging and the cost of living crisis.

“There’s been a little bit of reluctance to buy and we’re still seeing caution from dealers, but it’s a myth that they’re not stocking EVs at all.

“There was a big uptick in EV registrations three years ago and these vehicles are now coming back into the market. The volumes are only going to increase.”