Inside the world of deciding second-hand car values

The closest that auction bids come to being manipulated is when hand-picked examples of a recently launched model are presented by a car manufacturer to its loyal franchise dealers keen to get their hands on them before anyone else. 

As a former car manufacturer executive, Derren Martin, head of valuations at Cap HPI, has experienced more than his fair share of these orchestrated sales, which he describes as “just a piece of theatre”. 

What concerns him more are the more discreet tactics that car makers and others deploy to influence the values of their cars. These, plus things such as random price movements that can affect markets, are why he employs a team of specialist editors to scrutinise, interpret and understand the data pouring into Cap HPI’s offices. 

Unusual price movements in the order of 3% above or below Cap Condition – a measure that ranks valuations by three condition levels called Clean, Average and Below – are automatically red-flagged by the system. The editors must clear these red and, for lesser movements of 2%, amber lights each day by checking the underlying cause and deciding whether it represents a genuine shift in values or is just a one-off blip. Crucially, the editors are based around the country, so when they’re not putting out lights, they’re visiting dealers and auctions, sourcing data and opinions on the ground. 

“We have some very hard conversations with car manufacturers and are regularly asked to explain our figures,” says Martin. “I always tell them we’re simply reflecting the market.” 

His colleague Andrew Mee, head of forecasting, predicts where prices will be tomorrow and further into the future. Factors he considers include oversupply, model lifespans and changing fashions, as well as external forces including the country’s future political and economic landscape. His calculations inform the future values finance companies rely on when calculating personal contract purchase deals. 

“Of course, there are always surprises,” he says. “For example, in the past couple of years we’ve had to add our own experience of the changing fortunes of diesel cars.” 

Not long ago, Cap HPI and its rival Glass’s Guide dominated the car valuation business. Things are different today. Tony Anderson runs Arena Cars, a used car dealership near Aldershot, and he uses neither. 

“I use Retail Check, provided by Auto Trader,” he says. “It compares my cars with similar ones and tells me where, price-wise, they sit in the market. It takes into account details such as colour and options. Using it, I’ve had a BMW sell for £1000 more than Cap suggested it would. 

“Today, when customers can compare lots of prices at the click of a mouse, the game’s about getting them through the showroom door at prices that are not only competitive but which, for me, reflect the unique appeal and value of each car.” 

He must be onto something: after a lot of shopping around, my son’s girlfriend bought a Mini from him. 

Karolina Edwards-Smajda, director of commercial products at Auto Trader, says its Retail Check valuation tool for consumers and Retail Accelerator product aimed at dealers draw on Auto Trader’s 450,000 daily used car ads to gauge prices and supply and demand. Their point is that the starting point is a car’s selling price, not its trade price. 

“When they’re buying cars, we tell dealers not to focus on the trade price but on what they believe they can sell the car for,” she says. “Calculating what margin they are happy to work with and working back from the selling price gives them the price they should pay.” 

Philip Nothard is customer insight and strategy director at Cox Automotive, owners of Mannheim, one of the biggest auction groups in Europe. Does this former Cap HPI editor believe valuation providers rather than market forces determine what a car is worth? 

“The motor trade interprets valuations better than it did and has lots of data to cross-refer to,” he says. “In order to get a clearer picture of a car’s real worth, major dealer groups that buy and sell lots of cars supplement guide valuations with their own data relating to specific sales. So no, I believe there are too many checks and balances for that to be the case.” 

The last word must go to Edwards-Smajda. Asked who she believes is more accurate, Auto Trader or the traditional valuation companies, she says: “It’s not who is more accurate but, because there are so many variables, who is less wrong.” 

Conditional offers

When it comes to checking what your car is worth, that’s something you should bear in mind.

When you go online to find out what your car is worth, behind the scenes the figure is likely to be provided by a used car valuation company such as Cap HPI. It bases its valuations not only on specification, age and mileage but also on external factors such as changes in model supply and demand. To ensure the valuations are as accurate as possible, a team of expert editors checks the data. 

A key factor in determining a car’s value is its condition. When you seek an online valuation, you’ll be asked to confirm the condition of your car. For the motor trade, Cap HPI gives a value for each of three condition grades it calls Clean, Average and Below. As cars age, they deteriorate, so the criteria for each of Cap HPI’s grades changes to reflect this. For example, to be judged in Clean condition, a one-year-old car is permitted to have only one area or panel requiring a minor repair. Meanwhile, a three-year-old example is allowed three. 

Here are four online companies keen to value your car. To get the most accurate valuation, be honest about the condition of your car: 

whatcar.com/car-valuation: Sister website to autocar.co.uk gives guide prices for cars registered since 1998. 

clicktobuy.hyundai.co.uk: One of the few sites that gives you a price verging on the car’s trade value. 

hpivaluations.com: Powered by Cap HPI, this provider can tell you the price of the car when it was new, plus its private sale price, forecourt price and trade-in value today. 

autotrader.co.uk/car-valuation: Shows private sale and part-exchange guide prices for your car.

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