Used Car Market Experiences Significant August Drop, Reveals Cap HPI

August has unveiled a significant trend in car dealer news: there has been a noticeable dip in used car values. As the summer days wane, the motor trade news is abuzz with Cap HPI’s revelation that this month may see the steepest monthly drop in used car values for 2023.

By mid-August, the average value of used cars had already declined by 1.2%. This downward trend led Derren Martin, the director of valuations at Cap HPI, to anticipate nearly a 2% fall by month's end, making it the most pronounced drop this year. July had already witnessed a 1.9% fall. But, rather than sounding alarm bells, Martin suggests this isn't a market crash but rather a "realignment on pricing". This perspective is bolstered by the fact that, despite the recent dip, prices remain notably higher than they were a couple of years ago.

One could argue that the market is simply getting back into stride, as it does tend to become a tad unpredictable during the summer holiday season. And though August typically sees more stability in car values, this year has been an exception.

Electric vehicles (EVs), often the darlings of the motor trade news, haven’t been spared. In fact, their values seem to be dipping slightly faster, with an average decline of 1.5% by mid-month. But it’s not a universal trend; while some EV models like the Polestar 2 have seen values drop by a sizeable 6%, others, like the Hyundai Kona, have actually appreciated by 1%. Martin aptly remarks, “With EVs, they are now jostling to find their place.”

There's been a hint of concern regarding the hybrids too, especially given the devaluation of EVs. Martin had expected hybrid values to feel more strain, and while they haven’t thus far, it’s a trend that might be on the horizon.

However, traditional petrol and diesel enthusiasts need not be too concerned. Despite the fluctuations in EV values, these fuels make up such a minute proportion of the used car market that they're unlikely to drag down the overall value of petrol and diesel vehicles.

Martin also pointed out an interesting consumer behaviour: not many are yet convinced to opt for used EVs despite their decreasing costs. Yet, a few shrewd retailers are making the most of it by purchasing models like the Nissan Leaf, Renault Zoe, or Tesla Model 3 in bulk and subsequently selling them at retail.

In light of the rising cost of living and increasing interest rates, many consumers are feeling the pinch. Consequently, there are instances of potential buyers choosing to stick with their existing vehicles, prioritising essentials like mortgage payments.

In a reassuring note, Martin advises dealers not to fret over recent market dynamics, especially concerning EVs. September promises fresh opportunities, with an influx of cars returning to the market from fleet and leasing, offering a good stock for dealers to snap up.

For a comprehensive insight into the recent trends and shifts in the motor trade, do visit the original article on am-online.com.

source http://autoengage.co.uk/home-page-6165/b/used-car-market-experiences-significant-august-drop-reveals-cap-hpi