Used car prices dipped by 1.2% as the second half of October showed ‘significant signs of a weakening market’, according to Cap HPI.
The senior editor of Black Book at Cap HPI, James Dower, said that there was “no doubt that the market is slipping back at its fastest rate this year" warning that "the likelihood is that we will continue to see prices erode at pace through November and December" after seeing used car prices fall increasingly as October progresses.
Only EVs showed signs of continuing to rise as average values at three years and 60,000 miles slipped back 1.2%, with nearly new values at six months 5,000 miles and one year 10,000 miles exhibiting signs of even greater pressure as they fell by 1.3%.
Cap HPI said that the newer end of the market was feeling the ill effects of higher volumes of short-term rental vehicles appearing in the market.
It revealed that the level of pre-registered vehicles appears to be growing, and there are over 12,000 67 plate vehicles on offer. Many are identical models that are likely to see price erosion as a result.
The changing outlook comes at a time when inflation has reached a five-year high and the Bank of England is expected to raise interest rates from their low 0.25% rate in November.
Industry commentators have suggested the shift will put the squeeze on the PCP and PCH deals which have fuelled the new car sector in recent years.
Falling used car prices should prompt a reappraisal of residual values in order to maintain faith in such products and avoid customers slipping into negative equity, finance provider MotoNovo told AM yesterday.
Dower said: “In comparison to 2016, and the average observed since 2013, this was slightly less of a reduction than we have previously seen.
“However, it has signalled the steeper drop in values that would normally be expected moving into November. The later we moved into October, the steeper the decline in values as our subscribers to Cap Live witnessed.”
Movements by fuel type at three years 60,000 miles showed diesel side by 1.5%, petrol by 1% and petrol hybrid by 0.4%.
Dower said: “All fuel types saw a dip reflecting the general market conditions, the larger reduction witnessed on diesel reflected the increase of fleet and leasing returns that have, historically, seen greater proportions of diesel product.”
Pure EV values increase, at three years 60,000 miles, by 0.3%. Some vehicles experienced particular strength throughout October, Renault Zoe (13- ) rose by 4.9%, Nissan Leaf (10- ) increased by 3.8%, and the Citroen C-Zero (11- ) improved by 2.8%.
Dower concluded: “There is no doubt that the market is slipping back at its fastest rate this year and the likelihood is that we will continue to see prices erode at pace through November and December.
“Stock purchase decisions will need to take into account how quickly the market moves and Cap Live will continue to report on the ever-changing values.”