Government PiCG change to have minimal effect on used values

The shock timing of the government announcement on changes to the Plug-In Car Grant (PiCG) has prompted a flurry of questions regarding possible impact on used values for battery electric vehicles (BEVs). The short-term increase in purchase price for those vehicles close to the new threshold of £35,000 is unlikely to immediately affect nearly new values, since used values for those models are generally not close to list price. Example: BMW i3 125kW 42kWh 5dr Auto (cap ID 87355) has a list price of £36,520 and is valued at retail today on a 2121 plate at 1,000 miles at £28,000. Even if there were a small price increase artificially applied by dealers, transaction prices are expected to be largely unchanged and no impact is expected to filter down to three year old values. For the company car driver, there are still multiple incentives in place. The scale of the Capital Allowances and Class 1A Contributions benefits mean that most companies will still want their drivers to be able to take advantage of the zero Benefit In Kind rate and are likely to adjust company car bandings to compensate for vehicles which now fall outside of the PiCG subsidy. Although many of those who were considering quotes before the 18th of March will now be back to square one, there is probably less impact towards the previous threshold of the £50,000 list price as monthly lease rental bandings will tend to be wider. Generally, the PiCG is not the determining factor in the purchase decision for retail customers. Although some may choose an alternative model, or a lower specification version, many are unlikely to be pushed into a used car transaction and for most models the registration volumes are dominated by fleet drivers in any case. There will almost certainly be actions from the manufacturers to alleviate the problem. Many existing IDs are not far above the £35,000 limit and would become eligible for the PiCG following small reductions in list price. Other options undoubtedly being currently considered are reducing specification of existing vehicles (most of which are generously equipped) and accelerating the introduction of smaller battery versions to reduce up front prices. Some OEMs may also apply reductions to dealer discounts to partially alleviate the reduction in profitability. It is possible that we will now see a list price ‘vacuum’ between £35,000 and £40,000 in the same way that we saw one develop between £50,000 and £55,000 under the previous scheme, whilst at the other end of the price bracket we expect some list price inflation for those vehicles which were previously constrained by the £50,000 limit and this could benefit used values in a small number of cases. The biggest factor that is likely to influence used car supply and demand in the future is the availability of supply of new cars. Manufacturers may be tempted to divert supply to other, more profitable markets which are applying larger (and increasing) incentives, rather than build vehicles for the UK market. However, although the reduced speed of adoption would be expected to have a positive impact on used values due to reduced supply, used car demand in this situation is also stimulated by the new car demand: more cars on the road drive increased awareness and also fuel increases in used car demand. The situation is complex and further changes can be expected in March 2022, but our current expectation is that there is no overriding impact on used values in either direction. We expect BEVs to continue to reduce in price by more than internal combustion engine cars, but to retain a significant premium for the foreseeable future, partly due to the intrinsic value of the battery itself. There will of course be a lot of variation on an individual model level, but broadly we see the impact on used values of the changes to the PiCG as neutral.

Was December a turning point in used car values?

Watch our latest December webinar here In our December webinar, we reported that the used car market had changed. For the first time since the start of 2021, values dipped. But, it is important to remember that the market at that point was highly unusual. For example, Live values had just gone up by the highest ever monetary amount back in September. At the benchmark 3-year, 60,000 mile point, values in November dropped by 1.2%, equivalent to £235. There are a number of different ways of construing this movement. Yes, it is the first average drop in Live values since February, but it is similar to the increase in October and the second strongest move going into December since we introduced Live values in 2012. The most positive move in a November was in 2019, where values dropped by -0.6%, off the back of some heavy drops earlier in the year. To give this some context, the average since 2012 is minus 2.1%. So, one very strong argument is that the market remains strong. Values have traditionally always dropped at this time of year. We’re describing this as a plateauing of values – they remain strong and the increases were never going to carry on for ever. In the used van market, the monthly movements across 2021 have not seen a negative movement all year, and cumulatively, over the past 2 years have moved up nearly 31%. What is clear is that Euro 6 vehicles are performing better than Euro 5 With a LCV parc of over 4.3 million vans, of which only 2 million by the end of the year will be Euro 6, we will be watching closely how this split in Euro 6 and others pans out in 2022. Overall, similar to cars, performance, although tailing off in the latter months of the year has still been strong. The Euro standard performance will be one to watch going forward to see if the drift between the standards starts to increase.

cap hpi takes a trio of awards to end 2021

cap hpi rounds the year off with yet another award from dealers. The Brewery in London was the venue for the Latest Car Dealer award, which, for the first time in over a year, hosted hundreds of influential industry professionals. And the spotlight was most definitely on everyone at these awards as the ITV current affairs programme Tonight was there to capture footage for a forthcoming edition about the industry. According to Car Dealer the exhaustive judging process included a mystery shopping round and scored nominees on their performance to find out which ones truly deserved to take the top trophy. And, following on from cap hpi’s success in October, where it took both the Car Dealer Power Best Provenance Award and Best Valuations Award, this was to be followed up by a third award, the Product of the Year Award by those judging. This third award really does feel like it cements cap hpi’s position as the most valued and respected valuations and provenance provider in the UK. With not only dealers voting for their preferred provider, but industry experts also judging cap hpi to be an award winner. Of the two awards in October, Car Dealer Magazine reflected on valuation provision across the pandemic: “The stories of used car prices rocketing during the past 12 months don’t need repeating, but behind the headlines are dealers needing to have the right data and insight at their fingertips to keep ahead in a turbulent market…With dealers really rating the firm’s customer service and up-to-the-minute data provision.“  And speaking of the need for accurate history checks, Car Dealer noted: “…Sourcing is one thing, actually finding good quality cars is quite another, which is why a good provenance check provider has become absolutely essential for dealers. Just like last year, dealers couldn’t rate this year’s winner, cap hpi, highly enough with judges this year receiving incredibly high praise for the firm.” To learn more about cap hpi’s award winning services and why dealers rate cap hpi so highly, please visit www.cap-hpi.com.

The Full Threat of the Semi-conductor Shortage

With the semi conductor shortage seemingly continuing unabated, we take a look at the reasons behind the problem and more importantly, we explore exactly how the shortages are impacting the very latest new vehicles. If you’d like to see how this affects you and what you can do about it, download our free whitepaper, ‘The Full Threat of the Semi-conductor Shortage’ here.

Double Award Winners in 2021!

We’re delighted to announce cap hpi has won BOTH the Best Provenance Provider Award AND the Best Valuations Provider Award in the Car Dealer Power Awards 2021. The Power Awards is held every year by Car Dealer, awarding those service suppliers the award for outstanding products and services in their categories. Uniquely, Car Dealer Power is the only awards system allowing dealers to vote, rather than relinquish all control to a select panel of judges to decide the winners. The awarding of any accolade to a business is always a pleasure, but, because it is our customers voting cap hpi the best, not only for our history checks, but also for our valuation service, it is particularly satisfying and humbling. We thank each and every dealer for taking the time to vote for cap hpi across both our provenance and valuations services and if you’d like to read more about our award-winning products and how they will benefit you: Click here for more about the hpi checkClick here for more about Valuation Anywhere Thank you and stay safe The team at cap hpi

How long can these unprecedented times continue?

In late August 2021, cap hpi hosted its latest webinar on vehicle valuations, sharing our industry-leading insights with businesses across all automotive sectors. Watch our insightful webinar here, and read on for a few of our top takeaways. Preliminary background on new registrations Following a weak start, new registrations for cumulative passenger cars tracked above 2020 levels. While this rise signifies a steady return to the pre-pandemic normal in vehicle valuation rates, our industry is still some way off 2019 performance achievements. As of July 2021, new registrations hit 1.33 million units, compared with 830,000 in 2020 and 1.42 million in 2019. To date, hybrid electric vehicles (HEVs), plug-in hybrid vehicles (PHEVs), and battery electric vehicles (BEVs) collectively account for almost one in four cars registered. In July 2021, that figure was even more robust and just short of 30% of the market share. July’s new HEV registrations were less than 1,000 units behind diesel vehicles. In terms of vehicle fleet availability, there has been a significant year-on-year increase in available PHEV models ready for quotes, so this technology is now being actively promoted to the business user. The LCV lowdown New registrations for low-carbon vehicles (LCVs) have been more frequent than registrations for passenger cars. Currently, new registrations are tracking 2019 metrics almost exactly and are only 7,000 units behind that year. The shortage of new vehicles across both passenger car and LCV sectors has become a powerful story. manufacturers are increasingly issuing warnings that deliveries for the rest of this year will be tricky. As we approached last year’s holiday season, it was evident that the demand for LCVs in the used commercial vehicle sector dropped off slightly. Although, the vehicles that sold still performed well against industry predictions. It did give return to a phrase we had been missing for a while — the “provisional bid.” This approach is driven partly by the aspirations of vendors when vehicles do not reach their reserves, as they try and achieve similar performances from months prior that are unaligned with guide values. A high proportion of the remarketing companies we survey reported that their stock levels had reduced in August compared to July, which could be linked to the holiday season being in full swing. Here are a few additional eye-opening insights: A small number reported that the demand for LCVs reduced. Conversion rates also dropped, but no one had reported any reduction in prices. 40% of our customers expect September stock levels to be lower than the previous month, whilst 40% expect it to remain the same. The used car market Overall values culminated in a 3.7% average increase at three years. There was a slight lull in July; however, values began rising in early August. In August 2021, we predicted a continuation of the summer of strength for used car values, although the increase has not been as large as anticipated. During September 2021, there will be fewer part-exchanges and fleet returns coming, meaning supply will stay constrained compared to plate-change months in the past. Demand is also likely to remain how it is currently. Demand may increase in the future as more consumers decide to seek out a used car rather than wait months, potentially into next year, for a new one to be delivered. As the furlough scheme finally reaches its conclusion and economic reality bites for some, even if demand dipped away, there would not be the supply levels available to cause any crash from current high values. Gain more insights in our recent webinar, where we explored valuations and their relation to economic trends and market activity. Watch the entire webinar here!

July 8th Valuations Webinar

Watch the latest webinar by our expert editors As reported in our July webinar, we have seen that new passenger car registrations are continuing to recover, with 186,000 units registered in June 2021, a total of 910,000 units for the first half of the year. On an annualized basis this would be 1.89 million, which is higher than the SMMT’s current (April) forecast of 1.86 million units for 2021. LCVs meanwhile have been performing more strongly than passenger cars, and in the past two months exceeded pre-COVID (2019) monthly totals. June sales fell slightly behind 2019, at 34,000 units; total for the half year is 192,000 units, which is above the average for the pre-pandemic era. Looking at electrification, on a monthly basis, June Battery Electric Vehicle sales hit 11% market share, which brings them within reach of overtaking diesel (at 14%). If mild hybrids are excluded from diesel volumes, Battery Electric Vehicles actually outsold diesels by almost 5,000 units. In the used car arena we saw values continue to rise throughout June, albeit to a slightly lesser degree than in May, and what is blatantly clear is that they’re moving at such a rate that anyone still using monthly values are going to suffer, because they will be so far behind the curve on actual trade prices compared to retail. Putting these rises into context, the 2% rise in April, was the highest rise we’d experienced in a single month since 2009. The last 2-months have completely smashed those records. It feels quite strange that, now we’re in the 4th month of values going up, people are almost seeing it as the norm, a bit like when values drop, but it’s anything but the norm. As June ended, we can see that every sector is now up, even those that were struggling earlier this year such as MPVs. Sports cars have on average, gone up by over 20% since last July. An unbelievable stat, particularly considering the cost of some of those cars. Consumers have saved money by not socialising, not going on holiday, being tied to home for a lot of the time. They’ve thrown a bit of caution to the wind, bought something that looks good on the drive, makes them happy, isn’t necessarily just a sensible purchase for a commute that is no longer happening. Alternatively-fuelled vehicles were struggling & actually dropped in value last year, but they have now recovered, with plug in hybrids in particular doing well & worth more than at this time last year, by some 4%. Pure EVs & hybrids have also started to recover some of those previous losses as dealers take a bit more of a risk on putting these cars on their forecourts, obviously feeling more confident partly due to those previous price-drops. What does this mean in real-terms? if you own a 3-year old Mini Cooper S, it is now worth over £4k more than it was in early April – increasing by almost one third of its value. Whilst trade values have continued to rise, we’ve not seen such a dramatic impact in retail. Values have been increasing, as we can see from the data we receive, but not to the same degree. And looking ahead? Even if we DO see another lockdown or increased local restrictions, we believe the industry will continue to function – we saw a massive difference between the last lockdown and the first one and some big lessons have been leaned. Generally, the longer the lockdown, the stronger the used market will still be on resumption. There is potential for more job losses and softening in GDP growth as the various government support schemes start to unwind, but this will be offset by robust consumer confidence. But we do expect retail demand to soften from where it is now, however, it won’t collapse. Supply of used cars will continue to be relatively constrained through the rest of the year, but we still have positive outlook for the next 3 months. Regarding the economy, the outlook remains uncertain but from a used car perspective we’ve still got that concrete benefit of lower registrations last year and this year resulting in lower levels of used car supply in the future.

May 21 Valuations Webinar

Watch the May 27th Webinar here In our May webinar our team of experts reported back on the latest findings and looked at some of the economic indicators focussed on our industry, specifically focussing on the most recent extraordinary and unprecedented situation in which the market finds itself. As we see out May, retail sales are now showing a strong recovery – above forecasts, so it is fair to say that the retail economy has enjoyed a much-needed boost; but we should still note that the long-term impacts on the retail economy, such as the closure of several large businesses and others reducing their footprints, will take longer to rectify. Given the re-opening of retail, it should not come as a surprise that there has been a slight decline in online retail activity, but it remains significantly above pre-pandemic levels.Looking at current new car sales data, comparing the year-to-date with last year and 2019 we can see that once the market reopened, deliveries improved considerably, but volumes remain below 2019 levels and April will have benefitted from delayed March registrations. Unlike cars, LCV new registrations, seen in a year-on-year context, have been much less impacted by the lockdowns, and April 2021 monthly volume represents an historic peak.In the used LCV market the weekly volumes have fluctuated since the first lockdown, but what hasn’t is the strong weekly performance. Across all ranges of LCVs performance in 2021 surpassed that of 2020, but this was expected. What was also to be expected due to the reported issues surrounding the supply of new vehicles is that the volume of used vehicles in 2021 would be behind the average from pre-covid years, except for vehicles that are under 1 year old. Already we are witnessing used LCVs being sold wholesale for more than an advertised new one, in addition some 3-year-old models are being displayed in the retail world for more than they were when they were new. Based upon our wholesale data values have gone up for the twelfth consecutive month by on average 3.4% for all vehicles up to 5 years. In the used car sector, May will probably go down in history – we’ve certainly never seen anything like it. The average movement at 3-years, 60,000 miles during May is a 6.7% movement up. May has an increase of more than three times last month’s record. It is difficult to stress just how large and unusual an increase that is. Prior to last month, the largest movement up was 1% in February 2018. Since 2012, there have only been 21 of the 113 months when values have gone up & 8 of those have been in 2020 or 2021, 3 of them being the last 3-months. Values have not gone up at this time of year previously, except for in 2009.6.7% at the 3-year age point is equivalent to an average of £825 per car. That average amount of an increase on that age of car in such a short space of time in the wholesale market is extraordinary, particularly as values also went up by 2%, or £270, during April. 1-year old values have not increased to quite the same degree in percentage terms, going up by 5.6%, but this amounts to an average of over £1,200. Older cars have increased in value, but not to the same degree, “only” increasing by 1.2%, or £100. Every sector has seen values increase in May, not just niche sectors which in recent times have risen by more due to having more aspirational cars within them. Even many mainstream cars have risen by unparalleled amounts. It is also abundantly clear that retail advertised prices are not keeping up with trade. Much of this is due to many cars being advertised being bought at previous prices, so being advertised to achieve a margin, but dealers won’t be able to replace cars at the same prices they paid for them. Retail prices are generally going up, but at the moment the majority of increases are still lagging behind trade. We have seen a definite & significant uptick in our retail data over the last week or so though. So where do we go from here? The used market had been slightly slower to pick up than we had expected following the announcements on the schedule for re-opening. This month vendors aggressively increased pricing and the used market spiraled upwards. But this extreme positivity is clearly not sustainable. At some stage demand will soften. Dealers’ margins have been squeezed and increasing retail prices may stifle demand, especially if the timing of this coincides with the pent-up demand from lockdown being used up. We now think movements will be positive for the next 3 months, but revert to decreases for the remainder of 2021, with a slow start to 2022. The further we go out, the more positive the picture.

Honda Jazz & Jazz Crosstar

It’s not often a new Jazz comes along, then two at once, in the form of the Jazz, and the ‘pumped-up’ version the Crosstar. The differences are very easy to spot from the exterior. The Jazz is the typical five-door hatch. But the Crosstar has a different front grille, black cladding around the wheel arches, lower sills and integrated roof rails. It also has a raised ride height to help it over more difficult terrain, but be warned it is not an off-roader or 4×4, although its appearance certainly gives that impression. The Jazz has been on the market since 2001 and in those 20 years it has sold well. The gents on Top Gear regarded it as a bit of a dull car, driven mainly by the elderly, and often seen driving very slowly. I certainly remember clearly seeing one on a fairly clear M1, in the middle lane doing 43mph, I know because I slowed down to follow it, the driver was either being ultra-cautious, or just plain stupid but it definitely stuck in my memory. I had each of the new cars for a week each from the press department at Honda UK. First to arrive was the Jazz and I have to say, I wasn’t particularly looking forward to it coming – a week in a Jazz, what will people think?? However, the first thing I thought when I saw it was, that it looked pretty good and most definitely a modern appearance. Then I started driving it, and quickly realised it had a brilliant Hybrid system that self-charges as you go. When setting off it either uses just electric power, or if you push the accelerator a bit harder, the engine kicks in and you have double the power almost.. well… I wasn’t expecting that. When you take your foot off the accelerator or braking, or cruising down a hill, the engine stops and the battery gets power put into it, to use at a later time. This very clever system makes sure you don’t waste any energy, everything gets used and improves fuel economy and reduces emissions. The system was so much better than I thought it would be. Fir a small car the interior is huge, probably has more leg, head and shoulder room than cars in the next “size up”. I was impressed by it by its capaciousness. Under the back seat there is a large space for storage, and if you don’t know it’s there, it is easy to loose things as they can slide under there and could be lost forever. I found this out after buying a meat & potato pie from the local farm shop. I put it on the floor in the rear and got home with no pie to be found anywhere. The mystery of the missing pie! Yes the interior was so much bigger than I thought it would be. The Jazz is powered by a 1.5-litre i-MMD petrol engine that produces 97ps and coupled to a CVT gearbox, it also has the benefit of the electric motor that produces the equivalent of 109ps, so between the two power sources, it produces quite a kick, the 0-62mph (0-100kph) is a respectable 9.4 seconds. During the time I had the car, I was alongside a boy racer in his suped-up Golf, he saw me, an old bloke in a Jazz, easy he was thinking, I set off quite rapidly using petrol and electric power, and left him standing, well you have to sometimes.! After a week with the Jazz, the Crosstar arrived, and as you look at it, it’s really quite different. I’ll admit I immediately preferred this model, despite it costing a bit more, but you do pay for Style. To drive it was very a very similar experience, so similar in fact, it was a bot of a shame. But it was just as economical – I was averaging 68 mpg (3.459 litres per 100 km) so quite a cheap car to run. It’s certainly well put together and the fit and finish and all the materials used are up to a high quality. It’s not the most dynamic car to drive, but it certainly isn’t dull, it’s just a nice car to drive, comfortable and the sort of car you could drive hour after hour and with such good fuel economy you don’t need to keep stopping to fill up. It does every thing you need a car to do and is full of standard equipment, yes, lots of nice goodies. The boot is relatively spacious and the rear seats fold down in a very clever and unique way. As I put it down to test it. the mystery of the missing farm shop pie was solved, hidden well under the rear seat squab, thank goodness for that, it could have been very unsightly if left unfound for a while. I don’t really like to admit it and it pains me to say, I even feel a bit embarrassed to have to write these words, but I really enjoyed driving and using the two Honda Jazz’s. Price wise in the UK are £22,035 for the Jazz EX and for the Crosstar expect to pay £23,035 for the one I had on test. Martin Ward

April COVID-19 Webinar

Watch the April COVID-19 Webinar here We’re now half way through April, with showrooms reopening for the first time this year and fresh optimism in the air.In this webinar our team of experts reported back on the latest findings and looked at some of the economic indicators focussed on our industry. As the economy gradually reopened over the course of 2020, we saw this fall back, but only by around 5%, and the winter 2020-21 lockdown has clearly provided another stimulus to online, with share rising again to a record level of 36.1% in February 2021. Online shopping and home delivery are now so embedded for many consumers, coupled with continued working from home until July and the closure of several big-name high street stores, we would expect online to command around a third of retail spending going forwards. This obviously has implications for anyone operating or working in the home delivery sector and supplying vehicles to that sector.UK households continue to make record levels of savings – which it is hoped will translate into a consumer boom during the remainder of the year. Last year’s new car registrations ended at 1.63 million units, 680,000 units, almost 30% down on last year, but comparing month-on-month, March 2021 is almost 30,000 units above March 2020, which suggests some optimism for a recovery. The key question is which sector of the new car market is driving this? Looking at fleet and business versus private, March fleet new registrations were much stronger than 2020’s – up 35,000 units. By comparison, the private market was down slightly on the previous March. The LCV sector has been impacted very differently by COVID-19. New vehicle registrations for March are encouraging, but they are still down 11% on pre COVID levels of the same month. The current year-to-date figures are positive when considering those pre-COVID years were dogged themselves with things such as the introduction of Euro 6, the EU referendum and WLTP. But for the rest of the year supply will be the main issue as we see continued lockdowns across Europe, semi-conductor supply issues and speculation that manufacturer order books are healthy For LCVs, January & February were slow compared to previous years, however, prices being paid has not weakened. March sales almost matched the volumes seen in 2017. Buyer activity is unrelenting, with more main agents buying used stock to satisfy the demand. With no indication of large swathes of new stock available, used vehicles that do reach the market will gain added interest. In the used car sector sales rates have been the highest of any of the 3 lockdowns. Cars have been selling in the trade, albeit not to the same levels as they would if car showrooms had been open – 40,000 a week is a bit of a benchmark. Volumes increased throughout the first 2-months of lockdown 3, but have dipped in the last couple of weeks, although they were affected by bank holidays. For most of this time, conversion rates at auction have been increasing. What we’ve seen in the retail market during the period since our last webinar are retail sales volumes improving as consumer acceptance of handling the whole transaction online continues to increase. Some businesses achieved sales at over 90% of “normal”, although many car supermarkets were closer to the 50-60% mark. Some premium franchise dealers actually reported business levels ahead of where they would normally expect – many consumers remain active in making aspirational purchases with money saved or government backed funds received. Retailers have now been working within the constraints of the pandemic for a full year and what is clear is how far they’ve improved their online presence and overall distance selling procedures. They’ve also had to work harder than ever to achieve the levels of sales and to handle the increased number of competitors – not just the traditional ones in their local area. This increased online competition was always on the horizon but has certainly accelerated over the last year. In general, values have remained stable, Since February prices compared to cap have increased & last week sat just slightly above that benchmark figure. As we predicted in our short-term forecasting product, values have increased but only by a small amount. In the run up to car showrooms reopening last June, values went up sharper and quicker. This year they have increased by 0.4% or an average of about £50 at 3-years old. Desirable, aspirational cars continue to increase by more than the average. So, what happens next? Whilst it is a bit early to form a long-term judgement on what has happened since car showrooms opened, it has certainly led to a small, continued strengthening of values this week. Feedback from a variety of dealers has been positive and much of the buying journey remains online. Supply levels are steady. There’s the potential for new car supply to continue to be hampered by semi-conductor shortages. This could lead to buyers turning to used cars rather than new, as well as a shortage of part-exchanges in the market. There are also many companies & individuals reviewing their decision to offer or take a company car – this could lead to more buyers in the used market. Consumer demand is likely to stay strong for a while yet, but there are a variety of reasons why this will not last. The further we look to the future the picture improves once again, mainly because lower new car registrations in 2020/21 will result in reduced used car supply in future years. We have just had a year when many vehicles have driven much less than usual or even just been sat on the drive and haven’t moved. Going forward, we also expect to see a reduction in miles driven as many transition to partial or total home working. Therefore, there will be a greater number of ‘low’ mileage cars in the marketplace. You can get an in-depth view of our analysis on

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