The exceptionally strong levels of used car price growth continue to accelerate, fuelled by high demand and tightening supply, according to the latest data from Auto Trader.
In fact, based on the circa 440,000 used vehicles currently advertised on Auto Trader’s marketplace, the average price of a used car increased a record 9.7% year-on-year (YoY) on a like-for-like basis last week. It not only marks 57 weeks of consecutive price growth, but an acceleration on the 5.7% YoY growth recorded during the week of 12th April.
This rocketing trajectory has been driven, in part, by the very strong levels of consumer demand. On Auto Trader last week, there were over 15.3 million cross platform visits, which represents a 29% increase on the same week in 2019. And despite the huge surge in demand following the reopening of non-essential retail in June 2020 after the first lockdown, traffic to its marketplace is still up 1.0% YoY.
Another testament to the underlying levels of demand in the market is the increased speed at which retailers are selling cars. Last week, it took an average of just 22 days for stock to leave forecourts, which is 24% fewer days than w/c 12 April when physical showrooms were permitted to reopen.
This price growth has also been affected by ongoing supply challenges in the market; down -10.8% last week when compared to 2019 according to Auto Trader.
Pricing behaviour highlights retailer confidence
Looking at the pricing behaviour of retailers last week, the number of those making price changes and the value of their adjustments highlight the current strength of the market.
An average of 2,284 retailers made daily price adjustments, which is circa 350 fewer than the same period in 2019. What’s more, an average of 12,527 vehicles were repriced every day last week, which is 27% fewer when compared to 2019. The data also suggests retailers were making significantly smaller reductions to sticker prices, averaging at just -£15, which is 96% less than the average adjustment made in 2019 (-£335).
There’s also been a notable acceleration in the number of retailers making positive price adjustments. In fact, of those retailers who made daily adjustments last week, 37% increased sticker prices across their entire forecourts. This is up on the 32% recorded in May, and 22% in April.
Commenting, Auto Trader’s director of data and insight, Richard Walker, said: “After eight weeks of acceleration, we’ve seen another record set for price growth rates. And with consumer demand set to continue, fuelled by a positive sentiment shift towards car ownership, more disposable income, an aversion to public transport. This coupled with the ongoing supply challenges, we don’t see any reason for this growth to ease anytime soon.
“Despite the inflation in trade prices, our data highlights the margins available. Prices are high, days to turn are low, and demand is incredibly strong; I highly recommend retailers adopt a retail back approach to their pricing and sourcing strategies and make the most of this opportunity. Retailers should also assess the pricing across their whole forecourt and ensure older stock reflects the positive movement of the market too, otherwise they risk leaving margin opportunities on the table.”
Used diesel and petrol cars see record price growth
Looking at the data on a more granular level, the movements in petrol and diesel prices largely mirror the wider market, with both recording very strong rates of growth. In fact, the average price of a used diesel car increased a record 11.5% YoY last week, which is up on the already huge 10.3% recorded the prior week. Levels of growth in used petrol prices was only just behind its diesel counterpart, increasing 9.4% YoY. It marked a similarly huge leap on the prior week (8.0%).
The average price of a used volume electric vehicle (EV) recorded an equally impressive rate of growth, up 5.5% YoY. And, whilst there’s healthy levels of demand for premium EVs in the market, it failed to match the very strong levels of supply, which as a result saw prices contract -1.1% last week. However, it represents the lowest rate of contraction since early February 2021.
