Continued acceleration in price growth as average prices increase 11.1% YoY in June; most retailers saw sales volumes increase circa 12% in Q2 versus 2019.
According to the latest results from the Auto Trader Retail Price Index, the average price of a used car in June was £14,276; a year-on-year (YoY) and like-for-like increase of 11.1%. As well as the 15th consecutive month of price growth, it marks the highest single month-on-month price growth ever recorded by the Index, and by some margin, increasing sharply from the 8.1% YoY increase recorded in May. This price growth has been driven by the huge levels of consumer demand in the market, which was reflected in the increased traffic to Auto Trader. In June, there were 66.6 million cross platform visits, representing a 34% increase on the same period in 2019, whilst consumers spent 10.1 million hours researching their next car on the marketplace, which is a 25% increase.
Speed of sale accelerates as demand fuels record Q2 sales performance
Another testament to the underlying levels of demand in the market is the increased speed in which retailers are selling cars. Last month, it took an average of just 23 days for new stock to leave forecourts, five days faster than June 2019 (28). As a result of the huge demand in the market, according to Auto Trader’s proxy sales data[i], many retailers are reporting record used car sales performance, with Q2 2021 volumes increasing around 12% on the same period in 2019.
Acceleration in retailers increasing forecourt prices
Such is the strength of the market, Auto Trader continues to see fewer retailers adjusting prices on fewer vehicles, as well as a notable increase in the number of retailers making positive price adjustments across their forecourts. In fact, during the final week of June, of those retailers making daily adjustments, 37% increased their sticker prices, which is up on the 32% recorded in May and 22% in April, a clear sign of the intensification of pricing activity. Early observations suggest this has already increased further in July.
Commenting on the results, Auto Trader’s director of data and insight, Richard Walker, said: “Whilst supply constraints have compounded the situation, this massive acceleration in used car price is being driven by record levels of demand in the market. We’ve barely started to catch back the 1.7 million ‘lost’ transactions in 2020 while retailer showrooms were closed. Coupled with the strong levels of disposable income and savings, as well as improving consumer confidence and low interest rates, it’s safe to expect very high demand to continue for the rest of this year. “The steep trajectory we’ve been recording will begin to balance out as pressure on supply channels eases and the current levels of demand soften. However, we have every confidence we’ll see strong levels of price growth for a good period of time to come.”
Diesel growth tops all-time record
The huge month-on-month leap in price growth recorded across the total market, was also seen at a more micro level. Used diesel prices, which have been increasing at a rate higher than any other fuel types since November 2020, jumped from 10.2% YoY in May, to a massive 13.1% growth in June, with an average sticker price of £14,706. It marks the highest single level of growth recorded since Auto Trader began tracking used prices in 2011. The average price of a used petrol car last month was £12,836, which is a 9.6% YoY increase – three percentage points higher than the already significant growth recorded in May (6.5%). The average price growth of a used volume[ii] electric vehicle (EV) was only slightly more conservative than its petrol counterpart, increasing 9.2% YoY (£22,050) last month. Whilst average prices of premium EVs [iii]continue to contract, down -7.0% YoY (£44, 441), it is slightly less pronounced than the -8.7% drop recorded in May. This decline in prices is due to the very strong levels of supply in the market, outperforming an otherwise very robust level of consumer demand.
Sue Robinson, NFDA Chief Executive, commented: “The high levels of continued consumer demand are encouraging for both NFDA members and the UK economy as a whole. As further restrictions are scheduled to be lifted, franchised dealers continue to operate in secure and safe environments where consumers can physically acquaint themselves with their next vehicle purchase.”
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[i] Based on the levels of stock removed from Auto Trader
[ii] Volume EV brands categorised as: Ford, Volkswagen, Vauxhall, Peugeot, Nissan, Citroen, Kia, Hyundai, MG, Renault, SEAT, SKODA, Honda, Toyota, Fiat, Suzuki, Mazda, Mitsubishi, Smart, Dacia, Jeep, Subaru
[iii] Premium EV brands categorised as: Audi, BMW, Mercedes-Benz, Land Rover, Jaguar, Tesla, Volvo, MINI, DS AUTOMOBILES, Lexus, Abarth, Alfa Romeo