Used car values increased by 1.1% year-on-year, marking the strongest February since 2012, according to the latest data from cap hpi.
The performance was driven by demand from trade buyers, with the result significantly higher than the five-year average for February (0.2%).
Small to medium-sized cars performed particularly well during the month, with average upward moves for city cars (+3.3% or +£163), superminis (+1.8%/+£116), lower mediums (+1.2%/+£102) at the three-year, 60k mile point.
Jeremy Yea, senior valuations editor at cap hpi said: “Vehicles in the small to medium-sized sectors remain very desirable, and highly sought after at the right age and price points of sub £10,000-£12,000.
“With this continuation of high retail demand, the biggest challenges that most retailers currently face are not just replenishing sold stock levels, but also trying to retain workable profit margins whilst remaining price competitive.
“With current trade demand outstripping supply, along with continued strengthening of pricing throughout the month, this has only compounded this issue further. Many retailers are reporting that margin compression is still one of their biggest concerns this year, especially if retail advertised pricing is not increasing in line with current trade and wholesale pricing.”
The data also revealed that five sectors witnessed overall reductions in February at the three-year 60k mile point: executive -0.1%, large executive -1.4%, luxury executive -0.6%, sports -0.8% and supercar -0.9%.
Late plated electric vehicle product saw pressure in February due to strong offers on nearly new cars with limited mileage with values for the Audi E-Tron (18-), Hyundai Ioniq (19-) and Nissan Leaf (17-) all moving back in the month.
Yea concluded: “As we move into March, we are unlikely to see any significant increase in return volumes initially. If supply and retail demand remain at current levels, then we expect another stable and possibly positive month for used cars.
“Historically, the used car market in March is generally a stable one with values only moving down 0.1% since 2015, although 2019’s reduction of 0.9% does distort the overall average, with 2019 removed the average move is positive at +0.1%. As ever, the focus on the detail within cap hpi trade and retail valuations is more important than ever with real-time data providing a detailed view of the market.”