As UK inflation rate eases, used car price growth quadruples in just six months
As UK inflation rate eases, used car price growth quadruples in just six months
As the latest figures reveal inflation eased slightly to 3.1% in September, data from the Auto Trader marketplace shows that the average price of a used car increased 23.9% year-on-year (YoY) on a like-for-like basis last week[1]. Highlighting just how fast used car prices have accelerated over the last six months, it not only marks the 76th week of consecutive price growth but also a massive fourfold increase on the 5.7% YoY recorded during the week of 12th April when physical forecourts reopened.
The record price growth is continuing to be fuelled, in part, by the dramatic increase in consumer demand, which as highlighted on Auto Trader’s Market Insight tool was up 19% (based on searches and advert views on Auto Trader) last week, when compared to the same period[2] in 2019. This growth is reflected in the more than 14.8 million cross platform visits to Auto Trader, which marks a massive 32% increase on the same week two years ago. There was also a 20% rise in the hours (2.2 million) consumers spent researching their next car on its marketplace.
Further evidence of very strong consumer demand in the market is the faster speed at which retailers are selling cars. Last week, it took an average of just 23 days for stock to leave forecourts, which is 17% faster than the speed of sale recorded during the week of 12th April.
Another factor in the surge in prices is the ongoing drop in levels of supply, which were down -12% last week versus 2019[3]. The shortage of micro-chips and other raw materials which is directly and dramatically impacting worldwide supply of new cars is having significant knock-on effects on the remarketing supply of used cars.
Record growth in nearly new car prices exceeding brand-new equivalents
Such is the massive acceleration in used car prices, over 17% of the nearly new cars available in the market (those aged up to 12 months) are currently more expensive than their brand-new equivalents. This is a huge jump on the previous all-time high of 11% recorded in August, and over four times as many than in January (4%). Remarkably, 37% of nearly new cars are currently priced within 5% of their brand-new counterparts, up from 28% in August and 13% at the start of the year.
Commenting, Auto Trader’s Data and Insights Director, Richard Walker, said:
With so much attention focussed on inflation right now, there’s huge interest amongst economists on those components that are recording substantial price rises, not least used cars which have been a notable driver of recent UK inflation rates. With levels of used car price growth once again smashing previous records, there is a lot of speculation around how long this boom could last. Whilst inflation in itself does pose a potential risk to consumer demand, we don’t expect to see price growth slow anytime soon. This is based on the continued acceleration we’re tracking across the market - fuelled, in part, by increased levels of household savings, a positive sentiment shift towards car ownership, and the 1.5 million ‘lost’ transactions last year - coupled with the ongoing shortage in both new and used car supply.
Retailer pricing behaviour reveals ongoing confidence in the market
Reflecting the current strength of the market, Auto Trader continues to see fewer retailers adjusting prices on fewer vehicles and by smaller amounts. In fact, of the 2,218 retailers who made daily price adjustments last week (202 fewer than in the same period in 2019), the average price adjustment was just -£96. This time two years ago, retailers were making an average reduction of -£304, 68% more.
Greatest used car price increases and decreases by model as of 11th – 17th October 2021
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