Of course, this decline follows on from the significant increases in used vehicle values in the aftermath of Covid that was caused by the shortage of semiconductors and disruption to new vehicle production globally.

As the Covid factor slides further into the past, factors today such as increasing availability of new vehicles, changing consumer preferences, and economic uncertainties have all contributed to this downward trend.

However, as we move forward, the pressing question emerges: Is the fall in used vehicle values finally bottoming out in the UK?

Understanding the Decline:

The decline in used vehicle values in the UK in the last few months can be attributed to several factors, both domestic and global in nature. One significant factor clearly is the growing availability of new vehicles which in turn is creating an increase in supply and availability in the used market.

Additionally, a number of macro uncertainties, particularly those stemming from the economic state of the country, higher interest rates  and higher taxes have (and to an extent, still are) influenced consumer behaviour.

It could also be argued that there was always going to be a market realignment after the turmoil and legacy of the Covid period as vehicle production recovered globally and supply chains got back to normal.

Put simply, as volumes and availability increases, so too does competition for customers that puts pressure on the pricing of new vehicles, which in turn depresses relative pricing in the used market.

Another point of note has been the impact on resale values for both consumers and industry stakeholders alike. Owners of some premium branded vehicles for example have in some circumstances seen the resale value of their vehicle fall by 40% in just 7 months and some owners of other models have been finding it difficult to sell their vehicles as the plunge in values overtook their payment plans landing them in negative equity.

Regional Variations:

It's also potentially important to acknowledge that the dynamics of the used vehicle market can vary significantly across regions within the UK. Factors such as local economic conditions, population density, and infrastructure development can all influence pricing trends and demand levels.

Signs of Stabilization:

However, despite the downward trend last year, there are signs indicating that the decline in used vehicle values may be reaching its bottom in the UK.

One significant factor is the gradual recovery of the economy from the impact of high inflation. As inflation falls, interest rates move lower and the economy begins to grow again, consumer confidence is expected to rebound, potentially stimulating increased demand for both new and used vehicles.

Looking Ahead:

While uncertainties persist, there are reasons to be cautiously optimistic about the future of the used vehicle market in the UK. As the economy continues to recover and consumer confidence improves, we should see a gradual stabilization in prices.

If consumer sentiment continues to improve, we may see a situation where new vehicle demand again matches or surpasses short term supply (even though that supply is set to grow throughout 2024), which should see increased demand in the used market – particularly for vehicles between 1 and 3 years old – which in turn will raise prices and stabilise the sector.

Of course, the market can be impacted by future macro-economic shocks, so predicting prices and values given the current geopolitical and economic issues is more of an art than a science.

TYSONCOOPER are personal and fleet management specialists and can support you with up-to-date market knowledge and analysis.

If you want some help and advice, get in touch and we will go through the options as they relate to your personal circumstances.