Used Car Prices Experience Notable Shift in October

In recent motor trade news, October witnessed a significant 4.2% drop in used car prices. This is the most substantial decline since 2011, making it the most considerable fall ever recorded for the month by valuation specialists Cap HPI. Interestingly, such monthly declines exceeding 3% have only been reported three times previously.

Derren Martin, the esteemed director of valuations at Cap HPI, conveyed this insight in an exclusive interview with Car Dealer. The downturn means an average setback of around £850 per used car. Contrasting this with the previous year's figures, October 2022 saw just a marginal dip of 0.5% in used car prices. While many in the trade may be alarmed at the sudden drop, Martin prefers to view it as a 'significant realignment' rather than a dire 'crash'.

He shed further light on the matter, commenting on a notable observation: there's an abundance of cars available now, but a waning demand. "There’s more cars out there and there’s less demand," Martin noted. Car dealers have revealed that they’re merely replacing sold cars and not adding to their stocks, with not a single dealer planning to stock up. With increasing supply and only selective purchasing, it's hardly surprising that prices are feeling the pinch.

Regardless of the fuel type – whether petrol, diesel, hybrid or electric – all witnessed a price drop in October. However, electric vehicles (EVs) were the least affected, seeing a reduction of just 2.4%.

Mr. Martin candidly acknowledged the unexpected nature of this downturn. The industry had seen regular decreases since April, averaging around 2% from July to September. The rapid acceleration in the reduction over recent weeks certainly caught many off guard.

Gazing into the crystal ball, Martin predicts more of the same for November and December, expecting the market to find its footing and ‘reset’ come January. The remainder of this year looks to be a tad 'tricky', as dealers are becoming increasingly willing to slash prices to spur demand. However, the prevalent sentiment is that even such cuts might not suffice to boost the appeal and, subsequently, sell more cars.

Highlighting some of the factors at play, Martin pinpointed a medley of economic concerns: the mounting cost of living, the looming shadow of costly winters punctuated by soaring energy rates, and the spectre of inflation and interest rate hikes. These factors have all eroded consumers’ spending power, with fewer individuals opting to buy cars on a whim. Instead, the majority are driven by necessity rather than luxury.

As for 2024, Martin remains cautiously optimistic. He foresees a challenging start due to the abundance of available vehicles. However, with the anticipated scarcity of three-year-old cars later in the year, he is hopeful of a resurgence in the market.

All of these insights underscore the importance of staying abreast with motor trade news for those keen to sell more cars.

Originally reported by cardealermagazine.co.uk.

source http://autoengage.co.uk/home-page-9252-9795-4532/b/used-car-prices-experience-notable-shift-in-october