• The average price of a used car was £17,409 in September - a £370 increase on August
  • Average prices up over 35% in two years and a whopping 42% in three
  • Used car demand remains healthy, as car ownership viewed as a fundamental need

Despite current economic uncertainty, the latest data from Auto Trader highlights the stability of the used car market, with levels of consumer demand largely unaffected by recent turbulence. In fact, whilst softening on 2021’s massive post-lockdown surge, albeit by just -5%, the volume of advert views on the Auto Trader marketplace was up a massive 17% in September compared to pre-pandemic levels, whilst average daily users increased to 1.34 million.

This performance is continuing to fuel very strong used car prices; according to the Auto Trader Retail Price Index, which is based on daily pricing analysis of circa 1.3 million vehicles (making it the largest and most accurate view of the live retail market), the average price of a used car increased 11.2% in September on a year-on-year (YoY) and like for like basis. It marks the 30th month of consecutive price growth.

Although the YoY rate of growth is softening on the all-time high of 32% recorded in April 22, this is to be expected; a result of the market overlapping last year’s exceptionally strong levels (in September 21 prices were up 21.4% YoY). What’s more, used car prices remain stable. In fact, the Index shows prices rose month-on-month (MoM), increasing from £17,039 in August to £17,409 in September, which is ahead of typical seasonal trends (e.g. September 2019 and September 2018 recorded a -0.7% and -0.9% decline respectively).

Days to sell accelerates in September

A further indicator of the buoyant levels of consumer demand in the market is the speed in which used cars are leaving retailers’ forecourts. The latest data shows that used cars took an average of just 26 days to sell in September; two days faster than in August. In fact, it marks the fastest days to sell since October 2021 (24 days) and is ahead of pre-pandemic levels.

It’s the robust levels of consumer demand, combined with the ongoing supply challenges in the market that is continuing to drive used car price growth - the same market dynamics that caused prices to rocket throughout last year, albeit to a less dramatic extent.

As a result of the growth in used car prices, there’s been a surge in the proportion of used car purchases funded through finance, almost doubling in 10 years - up from 23% in 2012 to 45% in H1 2022. In the first nine months of this year, there were 16 million interactions with finance calculators on the Auto Trader marketplace. In September alone, the volume of interactions was 29% higher than 2019 levels, which highlights the growing importance of finance as household costs begin to surge.

Market shielded from economic disruptors

Despite potential headwinds, Auto Trader’s consumer research supports a positive outlook for the market, with circa 80% of consumers visiting the Auto Trader marketplace who were surveyed in September stating they were at least as confident as they were last year in their ability to afford their next car. What’s more, in a separate survey of Auto Trader visitors, three quarters stated they were intending to buy a car within the next six months; consistent with the levels over the last year.

Auto Trader remains confident these levels of demand will be sustained, not least due to the fact cars are, for the vast majority of motorists, a fundamental need as opposed to a discretionary luxury. This was highlighted in additional research, which found that more than three quarters (77%) of the 2,002 car buyers surveye needed a car to get around, which is up from 71% in pre-pandemic February 2020. Combined with the huge backlog (circa 500,000) of people waiting for a driving test, the circa 4 million ‘lost’ new and used car sales since the start of the pandemic, and the current disruption in public transport (cited by 50% of respondents as being a crucial factor to owning a car), the used car market should be shielded from wider economic disruptors.

Auto Trader’s Director of Data and Insights, Richard Walker, commented:It seems almost every week the market is having to contend with another potential headwind, most recently the Chancellor’s not so mini budget. And as we’ve seen following other recent economic disruptors, some have been quick to suggest it’ll be the straw that breaks the camel’s back. However, we’re simply not seeing any sign of it, with levels of consumer demand, intent, and budgets all remaining stable.

“To understand the current and future health of the market, it’s important to look beyond the headlines and assess the data for the true picture. Whilst the used car market won’t be immune to these macro changes, including the potential impact of rising interest rates on finance deals, there are a range of factors unique to the automotive market, which we believe will continue to insulate it from broader economic disruption and continue to fuel sustained levels of demand, and with it strong used car prices.”

Sue Robinson Chief Executive of the NFDA, added: “It has been another positive month in the used car market with average prices increasing year-on-year, coupled with strong consumer appetite, making for a healthy market. The continued consumer demand and increasing values highlights a stable market, which is positive going into the closing months of the year. There are cautious headwinds to look out for with the broader economic climate, but NFDA is confident this will not have an immediate impact on the used car market.”