Demand from trade buyers drove the used car market to increase by 1.1%, marking the strongest February since 2012. The result is significantly higher than the five-year average for February of 0.2%, according to the experts at cap hpi.
Particular strength was seen in the small to medium-sized car sector during the month, with average upward moves for City Car +3.3% or +£163, Supermini +1.8% or +£116 and Lower Medium +1.2% or +£102 at the three-year, 60k mile points.
Commenting on the used car market, Jeremy Yea, senior valuations editor at cap hpi said: “Vehicles in the small to medium-sized sectors remain very desirable, and highly sought after at the right age and price points of sub £10,000-£12,000.”
The team at cap hpi report that most used car retailers are seeing good demand despite recent inclement weather causing much disruption across the country.
Yea said: “With this continuation of high retail demand, the biggest challenges that most retailers currently face are not just replenishing sold stock levels, but also trying to retain workable profit margins whilst remaining price competitive. With current trade demand outstripping supply, along with continued strengthening of pricing throughout the month, this has only compounded this issue further. Many retailers are reporting that margin compression is still one of their biggest concerns this year, especially if retail advertised pricing is not increasing in line with current trade and wholesale pricing.”
The data company says only five sectors have witnessed overall reductions in February at the three-year 60k mile point: Executive -0.1%, Large Executive -1.4%, Luxury Executive -0.6%, Sports -0.8% and Supercar -0.9%.
In the Supermini sector, demand for vehicles aged three years and above was strong, while nearly new cars came under the most pressure. Top performers are BMW Mini Cooper S (18-) +5.1%, Dacia Sandero (13-) +1.3% and Ford Fiesta (08-17) +2.0%.
Late plated electric vehicle product saw pressure in February due to strong offers on nearly new cars with limited mileage with values for the Audi E-Tron (18-), Hyundai Ioniq (19-) and Nissan Leaf (17-) all moving back in the month.
Yea said: “Strong demand has again been witnessed for older electric vehicles with values for some of the mainstream models moving up. As disposal volumes reduced, especially around vehicles registered in 2017 for the Nissan Leaf (10-18), values have recovered. Also, values have increased for some of the more niche products that sit within this sector, examples of these are the Nissan ENV200 (14-), Smart FORFOUR (17-19) and Smart FORTWO cabriolet (17-).”
The overall SUV sector performed well and rose +1.1%. Small SUV’s saw a slight increase in values, but medium-sized SUV’s are most desired within the whole sector, and competition for this size of vehicle has been healthy throughout the month. Larger vehicles within this sector have witnessed some significant reductions in value in recent months. However, some green shoots of recovery have been evident, and although overall larger premium models have moved down, it’s not by the same amount as seen in previous months.
Yea concluded: “As we move into March, we are unlikely to see any significant increase in return volumes initially. If supply and retail demand remain at current levels, then we expect another stable and possibly positive month for used cars.
“Historically, the used car market in March is generally a stable one with values only moving down -0.1% since 2015, although 2019’s reduction of -0.9% does distort the overall average, with 2019 removed the average move is positive at +0.1%. As ever, the focus on the detail within cap hpi trade and retail valuations is more important than ever with realtime data providing a detailed view of the market.”