New research finds that Mazda, Skoda, Toyota, Mercedes and Ford drivers may be set to become the biggest monetary losers this year, should their cars be written off or stolen.
ALA Insurance estimates that a number of motorists could lose as much as £3,295 in the event that they are forced to make a total loss claim through their insurers.
And it all comes down to how much used car prices have inflated as of lockdown - as well as if prices should begin falling in 2023.
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The Mirror reports that if used car prices fall significantly, it could mean those who bought their vehicle at an inflated price could face being significantly more out of pocket in the event of an insurance claim. This is because you would only receive what your insurer thinks the car is worth today - not what you originally purchased it for.
The price of used cars rocketed largely due to Covid restrictions and less new vehicles in the showrooms, thanks to a semiconductor shortage. The current average price of a used car remains near a record level of £18,066, according to Auto Trader’s Retail Price Index data - but some experts say there are potentially signs of a slowdown in the market.
The December figure was up 3.4 per cent year-on-year, compared to 4.7 per cent in November, 8.1 per cent in October and 11.2 per cent in September. On top of this, CarDealer Magazine reports that used car sales have dropped for the second quarter in a row, down 12.2 per cent to total 1.78 million.
New data from ALA Insurance shows Mazda had the biggest rise in used car values, with average prices increasing by £3,295 between 2020 and 2022. This means if prices return to 'normal' depreciation values, Mazda owners could be left over £3,000 out of pocket.
Mercedes-Benz was second on the list, with values increasing by 8.9 per cent, up by £2,458. Skoda, Toyota and Ford saw similarly high reverse depreciation figures, with used car prices increasing on average by £2,261, £2,214 and £2,003 respectively.
Of course, no one knows what will happen to the used car market this year.
However, research conducted by ALA Insurance and YouGov last year revealed the average motorist is already as much as £6,000 out of pocket when their vehicle is written off or stolen.
Simon England, founder and managing director of ALA Insurance, said: “If you purchased a used vehicle for more than what its typical depreciative price should have been, and that vehicle is written off or stolen today or sometime in the future, then you would only receive what your comprehensive insurer thinks it’s worth at the time of the claim. Not what you originally purchased it for.
“We had a look at our policy data throughout this period and the numbers showed the top five vehicle brands with the most reverse depreciation between 2020 and 2022 were popular everyday brands; Mazda, Mercedes Benz, Skoda, Toyota and Ford.”
He added: “There is a way to protect the price you originally paid for your vehicle. ALA GAP Insurance is something you can purchase in addition to your comprehensive insurance.
“It means if your vehicle was written off or stolen, we would pay the difference between the comprehensive insurer’s settlement and what you originally paid for the vehicle - which for many used vehicle owners, may be more than the vehicle is worth today.”
Analysis of used car prices between 2020 and 2022 show the top ten manufacturers that had the highest “reverse depreciation” and indicates how much motorists could be set to lose.
- Mazda; rise in used car value - £3,295 (20.1%)
- Mercedes-Benz; rise in used car value - £2,458 (8.9%)
- Skoda; rise in used car value - £2,261 (13.9%)
- Toyota; rise in used car value - £2,214 (13.8%)
- Ford; rise in used car value - £2,003 (13.5%)
- Honda; rise in used car value - £1,632 (9.9%)
- Porsche; rise in used car value - £1,569 (2.4%)
- Nissan; rise in used car value - £1,396 (8.7%)
- Alfa Romeo; rise in used car value - £1,389 (7%)
- Peugeot; rise in used car value - £1,201 (7.7%)
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