Average used car values fell 2.0% (c.£390) in August at the three-year point, but EVs recorded a smaller decline, latest Cap HPI data reveals.

Derren Martin, director of valuations at Cap HPI

The overall fall was the fifth consecutive month of value reductions after a strong first quarter of increasing values and the largest August drop since the introduction of Cap Live in 2012.

The decline last month was also second only to August 2010, which saw a fall of 2.4%. The average drop between 2012 and 2019, before Covid affected the following years, was a drop of just 0.6%.

Derren Martin, director of valuations at Cap HPI, said: “August is generally a stable month for used car values due to low supply and steady demand. However, this year, supply is increasing, despite low registrations over the last three and a half years, and demand is more muted than usual. All this comes at a time when values remain inflated from 2021 increases.”

However, Cap warned the headlines do not paint the full picture, and said “the devil was in the detail”.

“For example, average movements in isolation show that EVs are the second strongest-performing fuel type this month, with diesel, petrol and plug-in hybrid vehicles all seeing larger adjustments. The fall of 1.7% is the smallest movement applied to EVs this year. Many models are now seeing adjustments more or less in line with other fuel types of vehicles that sit in the same sector, rather than the big adjustments we witnessed earlier in the year.

“August has seen less pressure for some of the smaller and medium EVs, and many of these models have now hit an attractive price point in the retail market and are encouraging wholesale buyers. Meanwhile, the Kia e-Niro, Peugeot e-2008 and VW ID.3 have all increased in value this month.”

However, some heavy reductions have been applied to some more expensive, premium EVs at the one-year/10,000-mile point, including the Audi Q4 E-Tron (-4.0%/£1,475), BMW iX1 (-4.0%/£1,675), Jaguar I-Pace (-4.0%/£1,550), Mercedes-Benz EQC (-5%/£1,500) and Polestar 2 (-6.0%/c.£2,000).

Looking at the individual segments, the supermini sector dropped by an average of 2.4% (c.£250),continuing a downward trajectory since April. While SUVs fell by 2.1% (c.£500) in August, medium-sized models are hit the hardest, particularly where volumes are high, and there are multiple examples of similar models.

Martin commented: “Overall, with retail and wholesale used markets slightly muted, values have realigned in August. The average is nothing hugely untoward, and certainly no crash, but a relatively strong movement down for the time of year nevertheless.

“Looking forward, sales channels in the new car market will be an interesting one to watch in the pivotal plate-change month. The retail market is subdued, with pressure remaining on household budgets, so it is likely that there will be some attractive offers to consumers, as well as larger volumes being diverted into fleet. Volumes will no doubt increase in the used market accordingly, as part-exchanges and fleet returns appear in larger numbers. The necessity of purchasing used cars will be a constant but at the more aspirational end.  Will consumer demand be enough to mop up the increased supply?

“As we approach a pivotal month in the automotive calendar, it is more important than ever to track live trade values. Retail advertised portals provide detail on retailers’ aspirational selling prices to consumers, but Cap HPI provide values based on actual trade selling prices, from over fifty different remarketing sources, and retail advertised pricing from five large, separate portals. As has been evidenced over the course of the EV value drops in the last year, basing buying prices off previously applied retail advert prices can be a dangerous policy in a falling market.”