The used car market remains stable, with no change in the value of an average three-year-old vehicle with 30,000 miles, according to Cap HPI’s latest exclusive update for Automotive Management (AM).
The data suggests values are expected to decline by 0.2% by the end of March.
Retailers are reporting steady consumer demand but face challenges in sourcing three to five-year-old vehicles.
Chris Plumb, head of current car valuation at Cap HPI, said: “Dealers continue to experience difficulties finding clean three to five-year-old vehicles.
“Stock shortages stem from several factors, including reduced new registrations during the pandemic and extended lease terms.
“As a result, the used car market remains strong, with values aligning with seasonal trends.”
Car supermarkets, independent retailers, and franchise dealers remain active, a positive sign for the market at this time of year.
Strong attendance at auctions
Feedback from auction houses holding physical sales has been encouraging, with reports of strong attendance.
This has complemented continued high levels of engagement on online platforms, further underscoring the strength of buyer demand.
Wholesale conversion rates remain high, averaging between 70% and 80%.
In some cases, sales have exceeded these levels, particularly fleet sales, where some vendors achieve full conversion rates.
Dealer and part-exchange sales have also performed well, demonstrating sustained buyer engagement.
Pressure on certain used EVs
Wholesale volumes of used battery electric vehicles (BEVs) continue to grow, with record month-on-month and year-on-year increases.
However, this rise in supply is putting pressure on certain models, particularly as buyers can afford to be selective.
Attractive offers on new BEVs influence the market, making them more appealing than nearly new alternatives.
In many cases, monthly PCP payments for a brand-new BEV are lower than those for a used model, limiting demand for younger, second-hand examples.
Plumb added: “With the arrival of the new 25 plate, we expect increased volumes in the used car market as fleet returns and part-exchanges become available.
“However, any impact on used values is unlikely to be felt before April, and even then, any downward pressure is expected to be modest.
“March has traditionally been a stable month for used values, with an average decline of 0.4% since Cap Live began in 2012.
“Excluding the COVID-affected years, this improves to a slight drop of 0.2%.
“There is no reason to expect any significant deviation from this trend, particularly with supply constraints still present and Easter falling later than usual.
“Stability will likely remain the market’s defining feature over the coming weeks.”