Coronavirus: Used car prices are falling and show no sign of stopping soon, experts warn

Published 28 May 2020

Automotive value experts are predicting a nationwide fall in the price of used cars as the UK economy struggles to recover from the impact of the coronavirus pandemic. 

Second-hand car values were down by an average of 0.4 per cent in March, compared to the December 2019. 

The data from automotive pricing experts Autovista Group forecasts that used values will continue to fall until 2022, with the market set to decline by an average of 1.3 per cent between March 2020 and December 2021.

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Data from the Office for National Statistics show the UK economy shrank by 2 per cent in the first three months of 2020, and Chancellor Rishi Sunak has publicly said it is "very likely" the UK is in a significant recession. 

Car pricing experts believe the rise in unemployment will suppress used car values for the remainder of 2020 and the the whole of 2021.

HonestJohn.co.uk has already received reports from readers who claim dealers are cutting their purchase values and offering much lower prices for part-exchange vehicles.

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Head of forecast car values at CAP HPI, Andrew Mee, told HonestJohn.co.uk: "The good news is that in the longer term, values will recover, as consumer confidence improves and as used supply reduces due to the fall in new car registrations that is happening now.

"In three years, we expect values to have fully recovered."

Analysts from Autovista Group say the coronavirus impact on used values will be most severe in other European markets. 

In Spain, for example, residual values fell by 5.4 per cent in March. In 2021, it believes the market will fall by an additional 5.3 per cent. And things will not recover in 2022, with forecasts showing 3.7 per cent lower residual values in December 2022 compared to March 2020.

Germany will see a 2.2 per cent drop in residual values in 2020, recovering slightly to a 1.7 per cent decrease in 2021 and 2022.

Are you part exchanging a car? Is your car worth less than you expected? Let us know in the comments section below.

Comments

hissingsid    on 29 May 2020

I detect some inconsistencies here.

As recently as 18th March you published the following topic headed :
"Coronavirus : Used car prices set to soar as coronavirus hits new car production".
In the article an "expert" predicted that "A fall in registrations could, in fact, help support used values in the long term".

So much for "experts".

conman    on 29 May 2020

If used car prices are going to fall, due to many people becoming unemployed what about new cars??? If I was unemployed let me think would I buy a new car or used car.???
Experts !!! many people pay for financial experts advise, so in theory they should have made a fortune with their shares as the EXPERT would have seen this virus coming and advised their clients. I look after my own shares, nobody looks after your money better than you.

hissingsid    on 29 May 2020

It would not surprise me if the "experts" who are now predicting a fall in used car prices are the same "experts" who predicted a rise two months ago. They are probably wrong on both counts.

Edited by hissingsid on 29/05/2020 at 13:54

   on 30 May 2020

1.3% is a nominal drop in values and likely to be offset with the car you may be purchasing also being reduced. A slightly over dramatic headline really HJ

gavsmit    on 1 June 2020

I'm sure this will all end in tears for car manufacturers.

For the past few years, we've seen huge new car price inflation, in terms of regular rises and then ridiculous price hikes of thousands when a new model is launched.

So second hand car prices were looking very attractive by comparison, and should hold their value even more as new car sales decline with people having less money and manufacturers still increasing their new prices.

I've just read on another car site that Suzuki has done what is becoming an increasingly common manufacturer's fiddle of relaunching its models with mild hybrid powertrains to satisfy tighter emissions regulation. This has resulted in slower, more complex, heavier cars which now cost a lot more to buy - and the extra couple of mpg the hybrid gives is never going to make a dent in the price increase over the ICE originals.

It sounds like the Suzuki Swift Sport is now ruined - they were taking the mickey with the original asking price of £18500 when it first launched but it now costs £21,570 with the hybrid setup - it's now quoted as doing 0-60 in 9.1 seconds! Even a Suzuki spokesman said the car is not a hot hatch - certainly not anymore with the hybrid gubbins, other than in price!

It's getting to the stage where I no longer want to buy a new car at all, rather than not buying a new car as a protest to ridiculously high prices.

f1kwa    on 1 June 2020

Where’s Honest John, the man himself, he’s not been around lately and the articles and responses to enquiries have been getting so poor that I’ll likely stop reading soon.
This is typical, if the so-called experts are right then what’s their prediction for the survival of manufacturers, manufacturers who pay for advertising on websites....
Hands up anyone who’ll happily rush out and buy a new car after reading this.
Depreciation in this country is already beyond a joke, read as many reviews of new cars you like and the one thing they never want to talk about is how much money you’ll likely loose.
If trade in values are plummeting then I guess we’ll all have to keep our current cars until the suggested recovery of values, which may then happen a bit sooner.

BMW Enthusiast    on 1 June 2020

Where’s Honest John, the man himself, he’s not been around lately and the articles and responses to enquiries have been getting so poor that I’ll likely stop reading soon.

Apparently this website is now under new ownership and the man himself, Honest John (not his real name) has nothing more to do with it. I’ve been reading this website for years and have learned a lot from it and will always continue reading.

JK62    on 1 June 2020

Let there be no doubt: HJ himself has left the building. This website has been sold on, hence the lack of HJ’s weekend ‘column’ lately. The only way to get answers from HJ himself is via the Telegraph.

aethelwulf    on 1 June 2020

I have a 15 year old Mondeo estate, 2L petrol and a 10 year old Piccanto. I hsall keep them until they wear out. The Mondy passed its MOT on Friday with no issue at all. It It is not loaded with extras that I did not want that could to go wrong.
Get back to a basic car and cut the rubbish extras , and the price obviously.

Cornish Jimbob    on 1 June 2020

good point but are there any basic cars left these days?

hissingsid    on 2 June 2020

good point but are there any basic cars left these days?

There certainly are, and their name is Dacia, a subsidiary of Renault.

They are no nonsense low tech cars and have been a runaway sales success. I would buy one tomorrow if there was an automatic in their range, but Renault won't allow it in case it diminishes Renault sales. Another example of manufacturers trying to sell us the cars they think we ought to buy rather than the cars which we want to buy.

Cornish Jimbob    on 1 June 2020

It's the same with motorcycle dealers, they are being told by manufacturers to hold firm and not discount at all. This will come back to bite them as the winter approaches. Basically told it's RRP or lump it. So I lumped it and I'm going to wait.

Peter Axworthy    on 2 June 2020

Yes,

I seem to remember that report too.

At the end of the day if used car prices fall so does your part exchange.

Probably best to buy a used car and keep your car and run it in to the ground or give it to someone in your family or a friend that can't afford to buy any car at the moment. A little bit of charity goes a long way in these sad times.

Stay safe everyone

Philip Heathcote    on 2 June 2020

It's not that long ago that this website was saying that used car prices would rise due to the making of less new cars.
I knew at the time that that was a load of rubbish. Anyone with half a brain could see that a severe recession was looming and prices will always fall in a recession.

New prices for cars are ridiculously high and depreciation on new cars is a joke.

The pressure is on the car dealers to sell cars to get cash flow in a recession so we will see massive falls in prices across the board its obvious. So why did this website publish an article stating the opposite when they knew it to be incorrect?

Michael Wardle    on 2 June 2020

Sad to hear about HJ departing but I guess someone offered enough for him to sell out his name. Let's hope the new owners don't ruin it.

Plodding Along    on 2 June 2020

This whole site is now owned by Heycar.

Plodding Along    on 2 June 2020

This site is now owned by Heycar, apparently.

hissingsid    on 3 June 2020

HJ had great wisdom acquired through long experience. His impartial common sense advice is greatly missed, and this site is the poorer for his loss.

conman    on 3 June 2020

Heycar has completed the acquisition of HonestJohn.co.uk just weeks after the consumer advice website slipped into administration due to “significant cash flow difficulties”.

The online car buying marketplace said in a statement issued to AM this afternoon (February 18) that it hoped to cement its intention to “bring greater trust and transparency to the market” and to “continue rapid growth” with the deal to purchase the long-established motoring advice and vehicle reviews platform.

The deal was led by Miles Needham and Simon Carvill-Biggs, partners at specialist business advisory firm FRP in St Albans, following their appointment as Joint Administrators of HonestJohn.co.uk Limited on January 7, 2020.

Having delivered independent motoring advice and vehicle reviews for the past two decades, the Honest John brand will provide heycar with access to an audience of more than 25 million site visitors.

conman    on 3 June 2020

SO WHO'S RIGHT THE EXPERTS OR THE EXPERTS ??????????

BCA has claimed that used car values have “steadily risen” during the COVID-19 lockdown period which prevented the majority of UK car retailers for trading.

The remarketing specialist said its valuations data had shown that used car values and demand from professional buyers had increased in May, with values strengthened as the number of online bidders participating in BCA’s Virtual Sales climbed significantly.

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