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COVID-19 Lockdown 3 was catalyst for used cars’ trade value fall

Derren Martin, head of UK valuations at Cap HPI

A slowdown in consumers’ car buying activity and uncertainty when the current COVID-19 ‘Lockdown 3’ restrictions will end was the catalyst for a fall in used car trade prices in January.

According to data published by Cap HPI, trade values declined by an average of 1.4% (£150) at the three-year point last month as the volume of cars sold through trade channels were around 60% of the levels seen in January last year.

Yesterday (February 1) Auto Trader reported that January brought a 10th consecutive month of price rises among the cars advertised on its platform.

It also reported an increase in consumer interest, suggesting that retailers could once again benefit from pent-up demand when COVID-19 restrictions are eased once again.

Cap HPI head of valuations, Derren Martin, said: “Our live data feeds show there is plenty of fluidity in market values across all segments and whilst the used car market and used car dealers have proved themselves to be a robust part of the economy, prices are not immune to the dynamics of supply and demand, despite remaining open for business virtually.

“We may well see more of the same until we receive clarity on when Lockdown 3 is likely to end.”

Martin said that traders’ ability to sell cars to consumers via click and collect and click and deliver services in the latest lockdown had ensured that cars were still being sold, “albeit to a lesser degree than previous years because of the Government’s advice”.

Speaking to AM yesterday, TrustFord chairman and chief executive, Stuart Foulds, said that the Ford of Britain-owned AM100 car retail group’s sales were at around 60% of their usual level, but added that strong aftersales performance and record LCV sales had been encouraging.

Martin said that reduced sales activity had meant that there had been less demand for car retailers to buy stock – triggering the decline in trade prices.

“With many buyers on furlough and dealers all stocked up from December, in preparation for January, we now see retailers in less of a mood to buy as their stock isn’t flying off the forecourts in the quantities seen last year and there’s less of a need to dip into the trade to replenish it”, he said.

“Uncertainty over when this lockdown will end and what happens immediately following that has also dampened their enthusiasm.”

Cap HPI said that MPVs had been hardest hit by the recent value declines – down 2.2% (£250).

Martin said that the Ford Galaxy, Seat Alhambra and Vauxhall Zafira had all dropped by more than 4%.

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