Used car values experienced the heaviest monthly drop since December 2014 and the steepest fall in the month of May since live data was introduced in 2012, according to Cap HPI.
On average, used values fell by 3.1% in May at the three-year, 60,000-mile point. It follows a 2.3% drop during April, which represents a significant realignment in used car values.
Derren Martin, head of UK valuations at Cap HPI, said: “Every model and generation is analysed on its own merits, and the vast majority of cars were not immune to substantial reductions.
“We have witnessed an almost perfect storm in the last two months. The drop is due to prices increasing in 2017 and 2018, coupled with heavy supply and weakening, seasonally affected retail demand. It has created an unwillingness to pay previous prices, which has resulted in significant declines in a number of cases.
“Despite the larger than usual book drops, it is important to put this into context following the strength we witnessed last year. The market is complex at the moment, and it’s important to use real-time data to stay aligned to a rapidly evolving situation.”
The mainstream sectors of city car, supermini, MPV, lower medium and SUV all experienced value drops in excess of the average, in percentage terms. Upper medium fared slightly better due to lower supply and already relatively competitive prices in this sector. Even convertibles dropped in value at a time of the year when they are usually increasing.
Diesel cars dropped in value by slightly more than petrol ones, and most electric vehicles fell in value. However, the Citroen C-Zero bucked the trend and values rose.
Martin concluded: “While supply levels are likely to be higher than they were last year, with prices now realigned and demand likely to pick up, it is very unlikely that prices will continue to decline at the rate witnessed over the last two months.
“Many cars now actually look reasonable value for money again, and this could lead to some relative stability.”
The average drop in Live valuations during June over the past 5-years has been 1.1%, at the three-years, 60,000-mile point, with the biggest falls during that time being 1.4% in 2015 and 2017.