Nuanced market records strong price growth for older cars as younger vehicle values contract
According to the latest data from Auto Trader’s Retail Price Index, used car values continue to grow, though at a slower rate than previous months, easing from a like-for-like increase of 2.8% year-on-year (YoY) in July, to 1.5% in August1. Prices have also softened on a month-on-month (MoM) basis, albeit by just -0.1%. However, these headline figures mask an exceptionally nuanced market, with a significant disparity between age cohorts and fuel types, which is being driven by large variances in market dynamics.
Looking at the data at a granular level reveals that older vehicles are outperforming the overall market, and by some margin, recording strong levels of price growth. In fact, those aged between 10-15-years-old have seen values rocket a massive 11% YoY this month, marking the highest rate of growth in eight months. And with an average value of £6,629, these cars are currently worth more than ever before.
The performance is the result of very strong consumer appetite for older and more affordable vehicles, with the current levels of demand growth for 10-15-year-old cars (up 10.9% YoY2) outpacing levels of supply growth (up 7.9% YoY).
ICE prices remain stable as softening EV values fuel contraction in younger segments
Conversely, retail prices of younger models have dipped this month, with the average value (£36,862) of ‘nearly new’ models (those aged up to a year-old) contracting -0.5% YoY so far in August. Demand for this age group remains exceptionally strong, increasing 37.9% on August 2022, but it’s struggling to keep pace with the large volume of cars entering the market, which are up 53.2% over the same period (albeit still down circa 50% on pre-pandemic levels). This is being fuelled by the gradual post-pandemic new car market recovery.
At an even more granular level, Auto Trader’s data shows a notable disparity between fuel types within this age group, with potential price growth for ‘nearly new’ cars being further restrained by falling electric vehicle values. Indeed, the average retail price of a ‘nearly new’ EV (£39,371) has decreased -10.2% YoY this month. In contrast, its traditionally fuelled counterparts remain buoyant, with an up to one year-old petrol and diesel car increasing 0.8% and 5% respectively.
Falling used EV values are having a similar, if not more profound impact on used cars aged between 1-3-years-old, causing overall prices within this age group (£27,027) to contract -4.1% YoY. That’s because despite the very robust levels of consumer appetite for 1-3-year-old electric cars (up 85.5% YoY), the rate of supply has surged (up 98% YoY) over recent months as the spate of brand-new EVs bought on finance three years ago re-enter the second-hand market. Due to this imbalance in supply and demand, the average value of a 1-3-year-old EV (£30,768) has fallen -26.4% YoY so far this month.
Average prices of internal combustion engine (ICE) vehicles in this age group are again, more buoyant, however they are stabilising, with petrol cars increasing by just 0.6% YoY this month, whilst average diesel prices remain comparatively flat at -0.1%, slowing from 1.7% and 1.3% in July respectively.
The overall retail market is stable, but as our data illustrates, it’s incredibly nuanced, with large differences in supply and demand across segments causing significant variations in pricing. With supply of younger cars improving, values of sub-five-year-old-cars are largely flat, whilst prices of older, and more supply constrained vehicles, continue to grow."
"Even at this granular level, there are major variances between fuel-types, which highlights just how critical it is for retailers to follow the data, and not the headlines to inform their pricing and sourcing strategies”
Used EV values record lowest monthly drop in 13 months, as demand reaches record levels
Looking at the used electric market more broadly, the current average price across all age groups is £35,297, which marks a month-on-month decline of just -0.3%, making it the lowest level of monthly contraction in 13 months. On a YoY basis, prices are currently down -21.6%, which is just a fraction lower than the -21.3% recorded in July.
The recent run of used EV price contraction, which began in January of this year, has been the result of a rapid increase in supply into the market. However, this explosion of growth is slowing; there are now only 12,000 second-hand EVs for sale each day on Auto Trader, down from over 18,000 in early March. It’s this easing, along with exceptionally strong consumer demand for used EVs on Auto Trader (representing a record share of advert views) which is helping to settle prices.
Although electric values are still easing, context is important. The EV market’s still an immature one, and what we’ve seen over recent months is a natural correction following a huge surge in stock. With supply beginning to soften and demand increasing with the help of very attractive savings for car buyers, we’re seeing clear signs of prices stabilising."
"It means for retailers who follow the data, and source the right electric stock for their forecourt, there’s some very strong profit potential”
Top 10 used car price growth (all fuel types) | August MtD (up to 20th) 2023 vs August 2022 like-for-like
Top 10 used car price contraction (all fuel types) | August MtD (up to 20th) 2023 vs August 2022 like-for-like
1. Up to 20 August 2023.
2. Supply and demand metrics based on Auto Trader’s Market Health metric, determined by levels of supply on Auto Trader and levels of consumer engagement onsite.
About the Retail Price Index
The Auto Trader Retail Price Index (RPI) is published monthly and provides an overview of the latest price and search data from our marketplace. Our team of data scientists monitor circa 800,000 vehicles each day, including 116,000 vehicle updates and an average of 39,000 vehicles added or removed from Auto Trader. Coupled with data from circa 450,000 trade car listings every day, as well as additional retailer forecourts and website data (OEM, fleet and leasing disposal prices and pricing data from over 3,000 car dealership websites and data from major auction houses across the UK), ensuring the Index is an accurate reflection of the live retail market.
About Auto Trader
Auto Trader Group plc is the UK’s largest automotive marketplace. It listed on the London Stock Exchange in March 2015 and is a member of the FTSE 100 Index.
Auto Trader’s purpose is Driving Change Together. Responsibly. Auto Trader is committed to creating a diverse and inclusive culture, it aims to build stronger partnerships with its customers and use its voice and influence to drive more environmentally friendly vehicle choices.
With the largest number of car buyers and the largest choice of trusted stock, Auto Trader’s marketplace sits at the heart of the UK car buying process. That marketplace is built on an industry-leading technology and data platform, which is increasingly used across the automotive industry. Auto Trader is continuing to bring more of the car buying journey online, creating an improved buying experience, whilst enabling all its retailer partners to sell vehicles online.
Auto Trader publishes a monthly used car Retail Price Index which is based on pricing analysis of circa 800,000 unique vehicles. This data is used by the Bank of England to feed the broader UK economic indicators.
For more information, please visit: plc.autotrader.co.uk
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