According to the latest results from the Auto Trader Retail Price Index, which is based on daily pricing analysis of circa 900,000 vehicles, the average price of a used car in January was £14,155: a year-on-year (YoY) and like-for-like increase of 7.4%. It’s the ninth consecutive month of price growth and marks a confident start to the new year.

The ongoing strength of pricing has been driven, in part, by “ongoing supply constraints in the market, as well as the solid levels of consumer demand that remain despite the current lockdown restrictions”, Auto Trader highlighted. Last month, Auto Trader recorded circa 60.1 million cross platform visits to its marketplace, which is an increase of over 4% on January 2020.

Retailer pricing behaviour indicative of a paused market

The relatively robust health of the market, which according to Auto Trader analysis shows businesses were trading at 60% - 70% of normal volumes in January, was reflected in the pricing behaviour of retailers last month. Based on the number of those making price changes and the value of their adjustments, Auto Trader highlighted it is “consistent with the same trends observed in lockdown 2, and largely indicative of a market which has been paused”.

The average daily reduction of pricing at £303 was only marginally lower than last year. In the last week we saw the average daily volumes of stock being repriced was 16,398. This is £377 less than the previous week but £2,757 more than we saw at the same time last year. We are seeing a higher volume of total stock on site when compared to last year so we would expect the overall volumes to be slightly higher than what we saw each day in 2020. On average 2,834 retailers made price changes in January, which was 8% fewer than the same period last year.

Commenting on the results, Auto Trader’s director of data and insight, Richard Walker, said: “From what we’re observing in the market, the current lockdown is following very similar patterns to what we saw during November’s. Price growth is strong, retailers are holding firm, and although sales have no doubt been hit in the short term due to the restrictions in place, all lead indicators of consumer demand remain robust. Along with the resilience and solid sales performance we’re seeing among our retailer partners, it gives us confidence we’ll see a quick return to health once the restrictions lift. And with the same demand and supply dynamics at play, the data doesn’t suggest any reason for big price corrections or adjustments in the coming months.”

ICE and electric price performance

Looking at the data on a micro level, the average price of a used petrol car in January was £12,821, which was a 6.9% YoY increase on January 2020. It is a significant easing on the 8.1% growth recorded in December and is due to the current over balance of supply in the market, which increased 11.9% YoY last month, compared to demand, which fell -6.2%. Whilst both supply and demand for used diesels fell in January, down -7.4% and -8.6% respectively, like-for-like prices continue to hold strong, recording a growth of 8.8% YoY, dipping very slightly on December’s 9% YoY. The average sticker price for a used diesel was £14,700.

In contrast to their ICE counterparts, electric vehicles (EV) continue to record strong levels of consumer demand. Indeed, demand for premium[2] EVs increased 65.6% YoY in January. However, with a much stronger level of supply in the market, up 250%, prices contracted, albeit marginally at -0.9% (£46,226). Whilst demand for volume[3] EVs was slightly more conservative, up 28.5% YoY, the gap between levels of supply was significantly smaller at 109.6%, helping to drive average prices up 10.4% last month (£19,385).

Sue Robinson, NFDA Chief Executive, added: “It is encouraging that average used car prices remain strong indicating a healthy market with strong consumer demand despite the lockdown, which is also reflected by retailers’ general optimism about car sales in 2021. The robust interest in electric vehicles is positive: with a maturing second-hand market, the improving charging infrastructure, and retailers working hard to inform their customers, there are reasons to be confident this trend will continue.”

[2] Premium EV brands categorised as: Audi, BMW, Mercedes-Benz, Jaguar, Land Rover, Tesla

[3] Volume EV brands categorised as: Ford, Vauxhall, Nissan, Peugeot, Citroen, Kia, Hyundai, MG, Renault.