Despite the current turbulent economic backdrop, used car prices grew month-on-month in October. In fact, according to the Auto Trader Retail Price Index, which is based on daily pricing analysis of circa 900,000 vehicles, average prices were up £178 on September (£17,409) and a significant £548 on August (£17,039).
It marks four consecutive months of positive or neutral month-on-month (MoM) price movements. And whilst October’s rate of MoM growth is slightly behind trends seen in previous years, it follows a particularly strong September, which saw prices surpass seasonal trends.
October also marked the 31st month of consecutive year-on-year growth, with average prices up 8.1% on a like-for-like basis. Although the rate of growth is softening from the all-time-high of 32.2% recorded in April 2022, it is to be expected; a result of the market overlapping last year’s exceptionally strong levels of growth (in October 21, prices were up a then record 25.6% YoY).
Consumer demand is seeing a similar YoY softening, however any direct comparisons made with 2021 will again be distorted due to last year’s very strong levels (fuelled by pent-up demand post lock-down, and the huge surge in competition for used cars due to new car shortages). According to the latest onsite data from Auto Trader, the volume of advert views on its marketplace dipped -4% last month against October 2021, but against the more ‘normal’ trading conditions of 2019, they were up 14%.
A further indicator of market health is the speed in which used cars are leaving retailers’ forecourts. The latest data shows that used cars took an average of 25 days to sell in October, which is one day faster than in September. In fact, it marks the fastest days to sell since October 2021 (24 days) and is ahead of pre-pandemic levels. So, whilst consumer demand is easing, levels remain comparatively robust and puts the market in a comfortable position ahead of what is typically the quietest trading period of the year.
Commenting on the data, Auto Trader’s Director of Data and Insights, Richard Walker, said: “In the majority of cases the fundamentals driving used car price growth – a shortage of stock and robust levels of demand – remain in place. The market won’t be immune to the current financial uncertainties, but there’s a range of factors unique to the automotive sector which should insulate it from some of the broader economic disruption. From what we’re tracking, there’s no sign of average used car prices falling.”
By applying a longer-term view of the market, it’s clear how rapidly used car prices have grown: indeed, last month the average price of a used car was up 47% on October 2019. The data also offers notable trends at a more granular level, including the growing number of cars (at a derivative level) which are worth more in 2022, than they were when registered two or three years ago. For example, a 2020 1.1 Ti-VCT Zetec Fiesta (petrol) is up £1,327 in just two years.
There are similar examples across other fuel-types and body types, however, some segments are seeing prices fall faster than others. In the case of premium brand, diesel SUVs, for example, the average price of a 2020 2.0 litre R-Sport Jaguar F-Pace has decreased £3,748. Crucially, however, even in terms of these depreciating segments, average prices remain above the level where they would be expected to be under normal trading conditions.
Walker continued: “As we can see the market is not playing by the traditional rules, with depreciation curves following abnormal trajectories – it really does highlight just how critical it is to follow the latest data and to align forecourt strategies to the fast moving and irregular market to ensure the best potential margin opportunities for your stock.”
Looking at movements from a fuel-type perspective, the average price of a used electric vehicle (EV) and plug-in hybrid fell -1.8% and -1.0% respectively MoM in October. It’s the result of a combination of factors, not least levels of supply moving ahead of consumer demand, as well as a slowing speed of sale.
Sue Robinson Chief Executive of the NFDA, added: “Auto Trader’s Retail Price Index reveals that the used car market has continued to perform against the backdrop of broader economic instability. Whilst demand is softening on last year’s record levels, there are signs of continued consumer appetite for used vehicles, which should make for a robust market over the coming months.”
Top 10 price growth (all fuel types) | October 2022 vs October 2021 like-for-like
|Ranks||Make||Model||October-22 Average Asking Price||Price Change (YoY)|
Top 10 price contraction (all fuel types) | October 2022 vs October 2021 like-for-like
|Rank||Make||Model||October-22 Average Asking Price||Price Change|
|8||Volvo||V40 Cross Country||£11,673||-11.8%|
|7||BMW||8 Series Gran Coupe||£52,030||-12.0%|
|6||Land Rover||Discovery 4||£19,073||-12.2%|
|2||Land Rover||Discovery 3||£7,370||-13.8%|
*Article Source https://plc.autotrader.co.uk/who-we-are/about-us/