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April’s retail used car prices market is not as negative as some recent reports have claimed, says Cazana.
Motor Trader recently reported that used car values experienced the heaviest monthly drop since December 2014 and the steepest fall in the month of May since live data was introduced in 2012.
In response to reports of falling retail prices Cazana claims that there is no evidence, and that sub 12-month-old cars actually increased in price by 1 percentage point in April over the previous month and by 3 percentage points over the last year.
Rupert Pontin, director of valuations at Cazana, said: “There is no doubt that the used car market is under a little pressure and there are concerns over supply and subsequently prices for certain cars but it would be wrong to say that the April used car market was in trouble. If the consumer will pay the retail price there is no reason that wholesale values will drop.
“As reported in our monthly update in early May it seems to be the case that the consumer is uncomfortable about making any significant financial commitments at the moment.
“This is evident from the consumer confidence data and also from sales figures in the retail sector as a whole.
“There is no evidence of retail pricing falling away significantly as far as our data indicates. Naturally there will be individual models that may experience a fall in pricing but this is usually due to fluctuations in supply.”
Cap hpi said that, on average, used values fell by 3.1% in May at the three-year, 60,000-mile point. It follows a 2.3% drop during April, according to cap hpi, which said it represented a “significant realignment” in used car values.
It is the second time in a month that cap has flagged up the decline in used car values, following its warning on 20 May. Derren Martin, head of UK valuations at cap hpi said: “Every model and generation is analysed on its own merits, and the vast majority of cars were not immune to substantial reductions.
“We have witnessed an almost perfect storm in the last two months. The drop is due to prices increasing in 2017 and 2018, coupled with heavy supply and weakening, seasonally affected retail demand. It has created an unwillingness to pay previous prices, which has resulted in significant declines in a number of cases.
“Despite the larger than usual book drops, it is important to put this into context following the strength we witnessed last year. The market is complex at the moment, and it’s important to use real-time data to stay aligned to a rapidly evolving situation.”