According to the latest data from Auto Trader, the exceptionally strong levels of consumer demand in the market is continuing to fuel record price growth.
Based on the circa 400,000 used vehicles currently advertised on its marketplace, Auto trade said the average price of a used car increased a massive 12.6% year-on-year (YoY) on a like-for-like basis during the week second week of July . This not only marked 63 weeks of consecutive price growth, but a huge acceleration on what is now a comparatively conservative 5.7% increase recorded during the week of 12 April.
Illustrating just how high the level of demand currently is, there were over 14.7 million cross platform visits last week to Auto Trader, which was a 24% increase on the same week in 2019. There was also a 14% rise in the hours (2.2 million) consumers spent researching their next car on the marketplace. Another testament to the underlying levels of demand in the market is the faster speed at which retailers are selling cars; it took an average of just 23 days for stock to leave forecourts, which is a significant drop on the 43 it took at the start of the year.
Record price growth fuels strong sales performance
As a result of the huge demand in the market, according to Auto Trader’s proxy sales data, many retailers are reporting very strong used car sales performance, with current sales volumes up around 4% compared to 2019.
According to Auto Trader there is little evidence of a ’price ceiling’ in nearly new vehicles (aged up to one year old). In fact, a snapshot taken on 1 July found circa 700 used vehicles priced higher than their brand-new counterparts, whilst one in five nearly new cars on Auto Trader are priced within 10% of their new car equivalents. What’s more, there are many models currently achieving very high prices after two years of purchase, with 87 different variants advertised on Auto Trader currently priced at 80% of RRP or more.
Commenting, Auto Trader’s director of data and insight, Richard Walker, said: “The ongoing price growth represents a huge opportunity for retailers, and whilst there are concerns over inflated trade prices, I hope the evidence of our data gives retailers the confidence to buy knowing the very positive trade margins available.
“Encouragingly, wider economic factors, as well as a positive sentiment shift towards car ownership, an aversion to public transport, and the 1.7 million sales ‘lost’ in 2020 while physical showrooms were closed, indicate this high level of car buying demand will continue for the foreseeable future. It’s for those reasons coupled with the huge success retailers have made in adapting to the changing retail landscape, we can be confident of sustained levels of used car sales throughout the year ahead.”
Pricing behaviour underpins significant retailer confidence
Reflecting the strength of the market, Auto Trader continues to see fewer retailers adjusting prices on fewer vehicles. An average of 2,126 retailers made daily price adjustments last week, which is circa 425 fewer than the same period in 2019. What’s more, an average of 11,175 vehicles were repriced every day last week, which is 26% fewer when compared to 2019. The data also suggests retailers were making significantly smaller reductions to sticker prices, averaging at just -£139, which is 60% less than the average adjustment made in 2019 (-£344).