Used car prices see largest monthly drop in a decade

In October, the second-hand car market saw a significant decline in vehicle values, with cars at the three-year mark depreciating by a substantial 4.2%.

Industry specialists highlight that this downturn is unprecedented since cap Live’s inception in 2012 and is the sharpest since May 2011—a span of more than a decade.

In the decade-long span since 2012.

It is rare for the value of used cars to dip so considerably and a drop of more than 3% has never been recorded in the past 10 years. Used car valuations have remaining high in the recent months and years and have shown strong resilience amongst many challenges facing the industry today.

Although it is common for there to be a seasonal drop in prices at this time of year as the market slows down, October 2023 stands out for its drastic fall with economic pressures intensifying the decline. However, experts are quick to comment that this is not the start of a market crash but more a correction on prices that remained higher for longer than expected once the supply of new cars started to flow more freely again.

One-year-old vehicles also saw a decrease in value by roughly 3.6%, influenced by an influx of late-model cars and some pre-registration activities. At five and ten years, the decline was 4.3% and 4.5%.

In terms of fuel types, petrol vehicles depreciated by 4.6%, diesel by 4.0%, hybrids by 4.1%, and plug-in hybrids by 3.9%. For the second consecutive month, electric vehicles (EVs) fared best, with a relatively lower reduction of 2.4% in October.

Despite a robust demand for EVs among retailers, companies are opting to replace rather than expand their inventory. The Renault Zoe and Nissan Leaf stood out, both seeing about a 2% increase in value for three-year-old models, attributed to their appealing low retail prices.

It is likely that values will continue falling in the near future as we move into November and the back end of Q4. This volatile period is likely to see some more record creaking monthly declines in used car values.

Amongst this news it’s important to remember that the used car market is historically buoyant against market pressures and has shown how quickly it can recover from short and longer-term dips in valuations.

For dealers looking to add new revenue streams to their sales process to support any loss of income from vehicle sales, there are several options available.

Value-added products such as warranties and SMART insurance are a perfect way to support your income whilst creating great experiences for your customers. Now is the time to provide additional protection to unforeseen financial costs to give your customers ultimate peace of mind for their newly purchased vehicle.