Black Swan conditions abound as used car values up for 6th consecutive month
cap hpi’s Live valuation data shows the unprecedented year continues, with positive valuation performance continuing through August, reflecting a real summer of strength.
September 2nd, 2021, LONDON – cap hpi, part of Solera Holdings, Inc., a global leader in risk and asset management data and software solutions for the insurance and automotive industries, confirms that used car values continue their unparalleled shift upwards.
cap hpi’s daily produced Live trade values reported an overall increase of 3.7% at the three-year point during the month of August, equivalent to almost £500 per car. Whilst this rise on
its own would be quite extraordinary, it comes off the back of value increases since car showrooms reopened in April.
Values have now risen by an unprecedented 20.3% in five months, and we have now experienced six continual monthly increases. Vehicle prices have increased, on average, by
more than one-fifth of their value in less than six months. Ordinarily, they would potentially have depreciated by 5% during this period, so a valuation swing of over 25% has occurred.
Retail activity can tend to drift away during the school summer holidays. This year, however, whilst there appeared to be small dip in demand at the start of the school holidays, this did
not last for a prolonged period. August began, it was clear that most retailers were still selling well.
Providing the answers as to why we continue to see this increase in used car valuations, Derren Martin, Head of Valuations at cap hpi, said, “Foreign holidays have taken a back seat to COVID concerns and whilst many UK residents have gone on holiday, they’re taking shorter breaks and more have opted for the ‘staycation’, which may even involve accessing the internet and seeking out purchases in a way they would not normally have done while relaxing on holiday.”
In the wholesale market, conversion rates have gone up. Independent retailers and car supermarkets have been concerned that the usual plethora of part-exchanges that typically hit the market in September may not be there due to new car supply reductions; and as franchise dealers hold those they do generate, planning to retail them rather than send them to auction. Similarly, franchise dealers have focused on selling used cars, as uncertainty remains over new car supply. All dealers have, therefore, been looking to stock up on used
car inventories, driving prices northwards.
Volume, commodity cars have particularly enjoyed a continued renaissance. The lower medium, or C-sector, has increased by the most in percentage terms, up by 4.6% or £525 on average at the 3-year, 60k-mile point. Some examples are the Ford Focus and Peugeot 308, up c.7% or £1,300 and £1,000 respectively at 3-years, and the SEAT Leon and Vauxhall Astra, up c.6% or £1,000 and £775 respectively.
The MPV sector was the next biggest mover, increasing by an average of 4.5% or £560 as dealers see them as value for money in the expectation that consumers are looking for larger, family-friendly vehicles with staycations and road travel in mind. Extraordinary increases in August were for the Citroen Grand C4 Space Tourer Diesel, up over 10% and £1,000 and the Vauxhall Zafira, increasing by 10.2% or c.£950. In the last 6-months, cars such as the Toyota Auris Hybrid, Mazda MX-5 have even gone up almost 50%.
“September will be challenging for the new car market. There will be fewer part-exchanges and fleet returns coming, meaning supply will stay constrained compared with previous plate-change months,” Martin said. “I expect demand to remain at current levels, possibly even increasing, as more consumers decide to seek out a used car rather than wait for a new car that could be some months away from delivery.
“It is likely that values will continue to increase through September, although we forecast this increase won’t be as large as in some previous months. As we continue to see values increase several times throughout the month, anyone still not using Live values will ultimately be caught unaware in such a fast-moving market.”
ABOUT CAP HPI
cap hpi provides decision support data and software solutions spanning vehicle valuation, validation, collision, mechanical repair, and total cost of ownership. cap hpi helps users make smarter automotive decisions by providing one source for data and software solutions that uniquely span the whole vehicle lifecycle; new, used and future vehicle valuation, validation, collision, mechanical repair and total cost of ownership.
All data is uniquely connected by the cap hpi code and a single methodology across all markets and sectors.
cap hpi puts technology at the centre of all data activities, from collection and processing, through to delivery and the development of new applications. It operates from an international hub in the UK; that ensures its systems, coding, data collection processes, and valuation methodologies are consistent, scalable, repeatable, and of the highest quality for every country. Valuations and forecast data are managed by local industry experts to ensure insight is added to each data set to enhance accuracy.
cap hpi operates as part of Solera, a global leader in risk and asset management data and software solutions for the automotive and insurance industries.
Solera is a global leader in risk and asset management data and software solutions, empowering companies across the automotive and insurance ecosystem with trusted solutions that adhere to the highest standards of data privacy, security and integrity to support connectivity across the vehicle value chain. Solera’s solutions bring together customers, insurers and suppliers, empowering smarter decision-making through service, software, enriched data, proprietary algorithms and machine learning that come together to deliver insight and ensure customers’ vehicles and property are optimally maintained and expertly repaired. The company is active in over 90 countries across six continents, processing more than 300 million digital transactions annually for over 235,000 customers and partners. By drawing on the market-leading solution capabilities and business process best practices from its technologies around the world, Solera provides unsurpassed scale and strength with superior performance while delivering innovation to move the industry forward.
For more information contact Jargon PR: