Used car values rose in July for the first time since 2009, rising 0.4% year-on-year, driven by strong demand and a shortage of supply.
This is according to cap hpi, which found that average values at the one-year point stayed level and vehicles younger than this dropped very slightly. At all other ages, there has been a small, positive movement.
Since car showrooms reopened on 1 June the retail market has been buoyant and July continued where June left off, with little sign of a slowdown. There remains some pent-up demand in the market, plus those consumers wary of public transport, both are keeping demand healthy.
Commenting on the pricing trend Derren Martin, head of valuations UK at cap hpi, said: “We have witnessed a relatively dramatic increase during June, then a stabilisation in July and it would appear that values have peaked but are remaining at or around that level for now. As always, there are winners and losers within these averages.”
Through lockdown there was some debate about the potential increase in demand for alternatively-fuelled vehicles as cleaner air became noticeable around our larger cities, due to a reduction of vehicles on the roads. However, in the short term, this has not been the case due to them still looking expensive versus internal combustion engine cars. Despite their green credentials and running cost savings, feedback from the market has been that consumers currently find the premiums too expensive over a petrol or diesel vehicle, plus there are concerns over range still.
Martin said: “more normal times, trade values would have peaked in late-May or June and would now be heading south. During July, values have increased by 2.4%. The reasons for this can be put down to some pent-up demand, good weather, no excess supply and the previously mentioned dynamic of some consumers saving some money during lockdown, and now looking to buy a desirable or even an extra car as a toy.
“Last month we predicted that July would be stable with no reason to expect a drop in values, but the large increases experienced in June were unlikely to continue. That is precisely what has happened. While there could be some very early signs of softening prices in August, we do forecast a relatively steady month, with possible drops to come from September onwards. When or if it comes, it is likely to be more acute for younger, higher value mainstream and premium cars.”