‘High demand’ for petrol and diesel vehicles is continuing to drive the strength of the used car market, according to Cap HPI’s Derren Martin.
Despite a 4.6% uplift in new car registrations during September, ongoing supply constraints across the sector meant that buyers continued to pay a premium for their next vehicle – sparking a 0.3% rise in used car values at three years and 60,000 miles.
Speaking to AM for the latest in a series of monthly market updates this morning (October 12), Martin said that values had declined 0.2% at October’s mid-point after what had been 2022’s first price increase.
“Last month’s 0.3% rise was fairly small but it’s still an upward movement we weren’t really expecting after the record increases of the past 18 months,” said Cap HPI’s director of valuations.
“There’s a lot of doom and gloom out there but not many of the retailers that we have spoken to have seen that impact demand so far in October.
“There are few that have said they would be stocking up for January, as they normally would, however. Right now, retailers are continuing to simply attempt to replace the vehicles that they have sold.”
Martin said that Cap HPI were still seeing used car volumes down by around 25% on pre-COVID 2019, with “good, clean cars” in short supply.
New car supply issues have not only steered some customers into a used car alternative, but have also ensured that the UK’s transition to electric vehicles (EV) is not progressing at the pace it otherwise might.
Asked whether supply issues have ensured petrol and diesel cars remain high on car buyers shopping lists, Martin said: “Of course there is still very strong demand for those cars in the used market.
“As well as the supply issues impacting new cars, electric vehicles (EV) remain very expensive. MG are one of few brands that are offering a value-driven option right now.”
Earlier this week Autorola reported that, while used cars are getting older the price of diesel, petrol and hybrids have remained “remarkably” stable over the past 12 months.
In August Society of Motor Manufacturers and Traders (SMMT) data showed that EVs are started to enter the used car market in greater volumes.
Despite a near-20% decline in used car sales in Q2, EV sales volumes rose 57.1% over the same period, it said.
Among the best-performing market segments highligted by Martin this month remain hard-to-come-by city car and MPV stock.
In the past 12 months the average price of a city car has risen by around 10% at three years and 60,000 miles, Martin said, while the average SUV has lost around 7% of its value. MPVs are up by around 0.2%, meanwhile.
Martin said: “These are segments that have been pretty much abandoned by OEMs looking to prioritise high margin premium vehicles and EVs amid all the supply issues.
“With the cost-of-living crisis they are cars that fulfil a really useful role for families and individuals looking to down size or just get into a car that simply does it all.”