Used car values finally drop as cost of living starts to bite – down £595 on average
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The wholesale price of used cars dropped by 5.9 percent last month as the cost of living, economic pressures and the war in Ukraine took their toll. Despite prices still being far higher than the same period last year, it is a sign that the surge is likely to be ending.
Stuart Pearson, the chief operating officer at British Car Auctions (BCA), said that the start of April had realised fears that the expectations of buyers and sellers were “drifting apart” after it saw the average used car sold for £9,340 last month – down by £595 month-on-month.
He said: “Last month we raised concerns that sellers and buyers ran the risk of drifting apart in March, and whilst there was an initial positive step, the reality is that by the end of the month things were drifting again, with the final published move into April falling well short of what the overall market was seeing.”
Meanwhile ebay Motors suggested both the war and the cost of living in the UK threatened the used car market’s stability.
Their online platform saw advertised used car prices drop 1.1 percent from last month.
Auto Trader also conceded that demand is softening after a price rise of just 0.1 percent on its platform last month.
Mr Pearson continued: “There is no doubt that things have got tougher for used car retailers due to the pressures on consumers’ wallets and that is bound to have an impact in the wholesale sector.
“This is where the value of real-time, daily updated valuation systems can add real ‘pounds’ value and our valuations team have been working closely with our customers to ensure that vehicles are valued in line with market expectations.”
But he feels issues with getting hold of new cars will prop things up, saying: “With March 2022 recording the weakest performance for new car sales since 1998, there is no need for panic as diminished supply should ensure that used values remain fairly resilient, although there is definitely room for some further balanced corrections over the next couple of months.”
In the US, The Manheim Used Vehicle Value Index, a gauge of wholesale market prices for used vehicles, dropped for its second straight month.
That represents the largest monthly decline since April 2020, during the worst of the pandemic recession.
Wholesale prices for used vehicles in the US — Manheim adjusts for age, mileage and other attributes — are now 5.4 percent lower than their January peak of $21,754 (£15,000).
In the UK prices have risen 30 percent year on year as new car orders are delayed by up to a year.
Car supermarkets, despite increased stock and price drops, saw cars average 3.1 days longer in stock than in February at 32 days.
Franchised dealers remained unchanged month-on-month at 42 days and independents saw a slight improvement from 49.1 to 48.2 days.
The fastest selling used car in March was the Volkswagen Golf with diesel models aged six to eight years averaging just 19.7 days on forecourts.Elsewhere the top 10 was dominated by Ford models with six to eight year old Fiestas in second place (20.9 days) and five to six year old Fiestas in third place (21.1 days).
The fastest selling fuel type was electric (39 days), followed by hybrid (40.5 days), diesel (42.7 days) and petrol 44.2 days.
However, electric cars continue to make up a small percentage of the overall market accounting for just 1.1 percent of listings and 1 percent of ad views.
But sales of new electric cars continue to skyrocket, up more than 80 percent on last year.
The Tesla Model 3 was the UK’s best-selling new car in December.
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