Used car values have reached a “tipping point” with prices rising for the first time in five months as an easing of COVID-19 ‘Lockdown 3’ retail restrictions draw nearer, says Cap HPI.
The automotive valuations experts claim that March brought a 0.1% value increase at the crucial three-year point following a series of drops at an average of 2%.
And, despite ongoing value declines for “expensive looking” electric vehicles (EV) and hybrids, Cap HPI said that the April and May is set to deliver wholesale price increases as dealers seek to satisfy this consumer demand.
Head of valuations, Derren Martin, said: “Initially as we entered March, values continued to drop in the same way they had over previous months.
“Over the last two-to-three weeks, however, the market has turned.
“Dealerships have been taking employees off furlough and they have been more actively stocking up to cope with increased consumer demand, both now and when car showrooms reopen in early-to-mid-April.
“More so than ever, though, the devil is in the detail as prices have varied for different sectors of the market.”
Cap HPI has suggested that concerns about vehicles supplies from certain brands could help feed pent-up demand for used cars in the months ahead.
Autorola had previously warned that used EVs appeared to have fallen out of favour with car buyers struggling to justify their cost, leaving many vehicles 'unsold on dealer forcourts'.
And Cap HPI said this week that, along with their hybrid counterparts, EVs continue to struggle to generate demand due to high pricing.
It is a trend which mirrors that seen in the new car sector where Government’s recent reduction in the plug-in car grant (PiCG) has impacted customer sentiment.
Cap HPI said that used EVs dropped in value by an average of 1.4% (almost £400) at three-years old, with plug-in and pure hybrids very similarly affected.
It said: “Supply continues to outstrip demand and these cars still look expensive compared to internal combustion engine cars.
“There have also been strong consumer offers on new electric cars and volumes of pre-registered and ex-dealer demos off the back of tactical new car activity in the final quarter of last year.
“However, as reported previously, Cap HPI does not believe the UK Government’s shock decision to lower the value of the plug-in car grant incentive will have a large impact on used car values.”
At what Cap HPI described as “the aspirational end of the market” used car prices begun to increase.
Convertible values rose at a level “rarely witnessed before”, it said, with premium cars including the Mercedes E-Class and the BMW 2-Series generating increases of more than 12% (£1,750 and £1,500, respectively) in March.
Cap HPI said: “These are rises generally not experienced in a single month. This is even more remarkable considering many convertibles went up in value last year and have not dropped by the usual amounts over the winter.”