You could be forgiven for thinking the used car market had popped on an old pair of slippers. A glance at Cap HPI’s figures for the first half of the year shows everything you would expect from ye olden days of the last decade – a strong first quarter, followed by a run-of-the-mill price drop in the second, albeit with slightly stronger prices than the typical seasonal norm (excluding the nuttiness of 2020 and 2021, when the pandemic caused a spike in used car values). Perhaps, then, it was more a new pair of slippers – identical to the old ones, just without the holes. 

Average depreciation for cars at three years/60,000 miles in the first half of 2025 was 0.9%, which is enough for Cap’s head of current car valuations, Chris Plumb, to draw comparisons with 2015 and 2016 – among the most consistent years for used car prices. 

“If we carry on this trajectory towards the end of the year – where we still think the monthly movements are going to be either slightly more positive or in line with seasonal averages – we’ll probably end up anywhere between -3% [depreciation] and -4% at the end of the year. Now, if we do get to that, we’d say the year in isolation is on the strong end of normal, because we’d expect normal depreciation, before Covid-19, to be anywhere between -3% and -5%.” 

Though this year’s market has so far broadly conformed to typical seasonal movements, the best months have come with the onset of summer. June’s (read May – Cap’s reports refer to the previous month) average monthly depreciation was 1.3% – 0.3% less than the seasonal average, while July’s (read June’s) 0.6% was getting on for half the typical 1.1% depreciation. 

“It’s actually the joint second strongest [July] movement that we’ve made going back to 2012 [when Cap introduced live data],” says Plumb. “It was beaten by last year, which was -0.1%, when there was really strong consumer demand through the summer months, and joint with 2018, which was the year of the used car. We’re not saying this year’s going to be the year of the used car, but it just shows where we are and what a good place the market is in.”

Fuel type focus

Normality with a side of strong prices is what used car vendors want to hear – and it is far more than can be said for macroeconomics – but there is, as always, a mixed picture behind the headline figures. First, the good news: hybrids are exactly that. Cap’s July report showed values for three-year-old/60,000-mile examples were up 1.6% year-on-year, while figures from online auction firm Autorola claimed prices for hybrids at an average of 32 months and 21,632 miles rose by 2.1%/£454 between January and June. UK MD, Neil Frost, told Business Car via email that hybrids “look set to continue their popularity in the used market”. 

Equivalent petrol and diesel cars were down 1.6% and 2.1% respectively, according to Cap (remember the strong demand and therefore high base in summer 2024), but anything with a plug had noticeably poorer residual values; PHEVs fell by 4.5% year-on-year and EVs by 9.6%. 

Autorola said the average price of EVs it sold at auction at an average age of 35 months and 22,545 miles fell by 3.6% between January and June to £16,895. Frost credited it to “the growing number of used BEVs coming back into the wholesale market from leasing fleets, subscription companies and OEMs alike, with supply slightly ahead of demand”.

Anecdotally, Business Car understands a significant number of Tesla Model Ys were due to be defleeted in July, which would inevitably blunt the model’s values, while Cap’s figures state that, of 73 directly comparable ICE and EV used cars, the latter were cheaper in more than 80% of cases. On average, three-year-old/36,000-mile EVs were valued at £4,132/16.4% less than an equivalent petrol in July. 

“You reach a point where the market goes, ‘oh, they’re a lot of car for the money; they’re cheap’,” says Cox Automotive’s insight director, Philip Nothard, “but it shouldn’t be that much cheaper. That tells you there’s a problem.”

In its July market update webinar, Cap presented a series of examples of three-year-old/36,000-mile EVs and their price differences against petrol equivalents. The most extreme example was the Jaguar I-Pace, which was £16,800/48.8% cheaper than a like-for-like F-Pace. Conversely, the Kia EV6 was marginally more expensive than a petrol Sportage, with a £100/0.4% premium. Between them were the BMW iX – £2,200/4.8% cheaper than a petrol X5 – and the Vauxhall Mokka-E – £3,400/24.3% less than a petrol Mokka. 

With the exception of the Kia, these are not the sorts of figures a fleet taking the risk on EVs is going to want to hear, but there is a theoretical silver lining, because such comparatively low prices could help to normalise and establish EVs in the used car market, where they lack incentives. Bargain status may cause them to shake off what Plumb and others believe is a lingering but clearly false reputation for being more expensive than second-hand petrol and diesel cars – which they were before values began to fall in 2022. 

Youth movement

Away from the great fuel type debate, core three-to-five-year-old used cars remain scarce, but supply of younger used cars is increasing in the wake of discounting and pre-registration in the new car market. Citing data from Auto Trader and Jato in its latest new car registrations announcement, the SMMT claimed discounts had totalled £6.5bn over the past 18 months. 

“Tactical activity is back on the agenda,” says Nothard, “in Q1, we saw pressure from the luxury car tax [newly applied to EVs] before 1 April. You then had the end-of-Q2, half-year point, which triggered it again, so there has been a huge push. What that does is put pressure on used values at 0-12/0-24 months, because there is so much on the market.”

Plumb agrees that the supply of sub-two-year-old cars is on the up, and it is an area on which he is “keeping a watchful eye”, but he says he has yet to see prices kick down. 

“It’s coming from a very low base point,” he says. “For the last four years, the market hasn’t seen that sub-12-month-old product.”

He adds that the rise in pre-reg is, as always, more common among some manufacturers than others, and that while it is tempting to blame it on the ZEV mandate and this year’s 28% EV-only requirement, EVs only had a 17% share of cars on a 25-plate advertised with fewer than 1,000 miles on the clock in July, according to Plumb.  

“Some retailers have been starved of that 12-month-old product for the last five years so, if it becomes available, they will have an appetite to take it, especially if it was their core product,” he continues, “and there’s a lack of supply of three-to-five-year-old vehicles in the market… so maybe people might start to have to look at that 12-month-old product.”

It is safe to say that EVs will account for a much bigger slice of the nearly new car parc towards the end of the year – as they did in 2024 – when manufacturers aim for that ZEV mandate percentage. Experts do not believe that has yet had a demonstrable impact on residual values, and barring any anomalies, the broader market is expected to follow its recent pattern for the rest of this year and beyond. 

In the July update webinar, Cap’s head of forecast strategy, Dylan Setterfield, said used car values were 30% higher than a “normal expectation” market in June 2020 (i.e. what would have happened without the pandemic and prices shooting up) and that figure was still expected to be more than 28% by July 2026.

For the time being, at least, it looks as though the slippers are staying on. 

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