According to the latest data from Auto Trader, the health of the used car market is continuing to build momentum, with growth recorded in demand, sales, and retail prices. In fact, Auto Trader’s Retail Price Index, which is based on daily pricing analysis of circa 900,000 vehicles across the market, shows the current average price of a used car is £17,880, which marks a 1.7% year-on-year (YoY) increase on a like-for-like basis.
Although the rate of growth is down significantly from a peak of 32% YoY in April 2022, this current rate is on top of the massive 31.9% YoY increase recorded this time last year. It also marks a month-on-month (MoM) increase of 0.7%, which is not only ahead of the 0.3% recorded last month, but also the 0.4% February average between 2011 and 2019.
Prices have remained stable due to the ongoing demand and supply dynamics in the market. Although demand has softened against the previous highs recorded during 2021, overall levels remain robust, which is reflected in the very strong consumer engagement on Auto Trader. In January, there were a record 80 million visits to its marketplace, which is nearly 10 million more than the prior year. Reassuringly, this uplift in demand is translating into used car sales, which according to Auto Trader’s sales-proxy data, were up circa 8% YoY last month.
Another indicator of consumer demand is the is the speed in which used cars are leaving retailers’ forecourts. Auto Trader’s data shows that used cars are currently taking an average of just 25 days to sell, which is one day faster than February last year (26), and five days faster than pre-pandemic averages. Highlighting the market’s positive trajectory, it’s also 15 days faster than January (40).
This strong level of demand in the market, coupled with the ongoing shortfall in stock (down -11% YoY), is not only keeping used car prices stable, but also supporting a healthy and profitable sales market. In fact, Auto Trader’s used car Market Health metric, is up 17% YoY this month. It follows an 8% YoY increase in January, which was the first positive month of growth in over a year.
Commenting on the data, Auto Trader’s Director of Data and Insights, Richard Walker, said: “Over the last few months we’ve been seeing and hearing reassuring signs of a used car market in very robust health. These metrics, along with wider macro-economic bellwethers, such as January’s softening in inflation rates and the increasing optimism for household finances, adds to our confident outlook for the year ahead.”
Batteries running low for used EV prices
Despite recording a positive YoY and MoM growth, average used car prices are being impacted by the ongoing contraction in used electric vehicle (EV) values (£34,197), which as of mid-February, are down -9.1% on the same period last year. In contrast, the average price of a used petrol (£16,266) and diesel (£16,326) car is up 3.3% and 1.4% respectively.
Highlighting the nuance of EVs, it’s evident the decline in prices is being heavily influenced by the premium end of the market. Indeed, whilst the current average value of volume EV brands (£26,309) have fallen by a relatively conservative -3.7% YoY, their premium brand counterparts (£43,762) have dropped by a whopping -13.1%. This disparity has been fuelled, in part, by Tesla’s new car price cut, and the subsequent adjustment in used prices; the price of a one-year-old Standard Range model fell circa £1,400 overnight on Auto Trader.
More broadly, the drop in average used EV prices is being driven by the huge overbalance of supply in the market. Whilst demand levels for used EVs on Auto Trader remain stable – up circa 40% YoY – the rate of stock growth has rocketed, with current supply up 303% YoY. Auto Trader’s data, which is based on the broadest single view of electric vehicles in the market, shows this trend at a more granular level: so far this month, the volume of used Mercedes-Benz EQA in the market has increased 823% YoY (demand +71.9%), whilst the number of MG MG5s (demand +56.5%) and Vauxhall Mokka-e’s (demand +77.5%) have increased 918%, and 958% respectively.
Walker added: “What’s happening in used EV prices is a natural consequence of a sudden and sharp increase in supply. Consumer demand has been dampened slightly by high energy prices in the last few months, but contrary to what some reports may suggest, consumer appetite for electric has far from fallen off a cliff. Availability and affordability have been major drivers in the success of some brands in the new EV market, so this increase in stock and the slight reduction in prices may well encourage more used car buyers to make the switch to electric.”
*Article Source www.newspress.co.uk