City car values continue to decline
So how are used car values performing in the City Car sector this year? Well, in keeping with last year’s pattern at both 1 and 3 years old, values have performed relatively strongly up until May and have now started to see a steady decline.
In percentage terms, drops in values of City Cars have been heavier than most other sectors of the market, however it is important to note that these vehicles tend to be of a lower overall value. So the actual value of movements has not been particularly high.
The main influences on the prices of these smaller cars has been increased volumes and downward pressure from new car prices. Let’s take a look:
What is particularly noticeable about this sector is the increase in volume within the sold trade data. Since 2008 volumes have risen by 61% and the sector has increased its share of the market from 2.9% in 2008 to 4.9% in 2014.
By comparison, the slightly larger vehicles within the Supermini sector, which have a larger market share overall, have only increased in volume by 4% since 2008. Although the government scrappage programme, that ran from 2009-10, initially helped the popularity of this sector, in recent years the advent of manufacturer supported finance schemes, particularly PCPs, has helped to grow this sector by using attractive low deposits and low monthly payments. At the end of their finance term, these ex-PCP cars are likely to come back into the used market at regular intervals thus providing a steady supply of good quality, sensible mileage used cars – an attractive proposition for the consumer. However, due to the enticing new car offers, there will always be a sensible price gap required to encourage buyers into a used car.
Turning our attentions to this month in particular, so far in September, values in this sector have dropped by around 1% as we start to see the early signs of increased volumes of part exchanges coming into the used market, due to the September plate change. This pressure is likely to be felt for a few weeks yet, due to the turnaround time of preparing these used cars for sale and also relatively lengthy new car lead times have led to many new car purchases being pushed into October.
Notable movers so far this month (September) * figures correct as of Tuesday 16 September
This is a particularly interesting time for used car prices, particularly for these small consumer-friendly cars and Black Book Live, CAPs real-time valuation tool, will be reporting price changes on a daily basis during this potentially more volatile time.