Used car prices continue to creep up

The latest figures from the HPI Used Car Valuations Index offer the struggling motor industry cause for a small celebration, with a slight increase in month-on-month vehicle values – the third monthly increase in a row. Early indications show that both petrol and diesel vehicles of 12 and 36 months are performing well in May, with the rate of year-on-year depreciation falling from 21.5% to 18.5%.

However, whilst the used wholesale market is still relatively buoyant, the HPI Index also suggests that used car values on the whole are levelling out, with just the 4x4 sector rising in value.

All 12 month cars increased in value by 0.3% with the diesel sector seeing the biggest increase up 0.5%, compared to 0.2% for petrol. Comparatively, 36 month cars increased by 0.2% across both petrol and diesel sectors, showing considerable slowdown compared to the month before.

Looking at the year-on-year figures, the rate of decline is slowing down. All 12 month cars decreased from -19.3% to -16.5%, while 36 month cars dropped from -26% to -22.5%. The 36 month petrol sector fared best with a drop of nearly 4% from -27.4% to -23.8%, while diesels over the same period decreased from -24.7% to -21.4%. The 12 month petrol and diesel sectors saw a drop from -19.3% to 16.6% and -16.5% respectively.

Martin Keighley, HPI’s Used Car Valuations specialist, comments, “The economic downturn seems to have levelled out, or at least be bottoming out, which has led to cautious optimism amongst the traders and dealers of the used car market. However the shadow of potential unemployment rises along with the current turbulent political environment will keep the lid on any serious growth for the foreseeable future. Small cars with low mileage continue to make very strong money at auction, with retailers prepared to work with smaller margins. However, higher mileage and larger cars are still struggling to find buyers and retail activity remains extremely patchy. We expect to see month-on-month rises slow or even stall over the coming months, but year-on-year values may continue to improve.”

“Overall, the stock of new cars is still too high, particularly of medium and larger models, 4x4s, large-engined and less efficient cars. Whilst the scrappage scheme has increased the existing demand for some small cars, it has done little to diminish the compounds of unsold cars – or provide any help to the used car market.”