Older car values record strong growth as used EV prices continue to stabilise
Friday 21st July 2023, London – According to the latest data from Auto Trader’s Retail Price Index, the growth in used car retail values has softened slightly this month, easing from an increase of 3.2% year-on-year (YoY) in June, to 2.8% in July (up to 20th). On a month-on-month (MoM) basis, however, average retail prices have risen 0.3%.
On a more granular level, the headline figure masks strong rates of growth across fuel types and age cohorts, especially among older cars. In fact, the current average retail value of a second-hand car aged over 15 years old is £5,805, which is an 8.7% increase on July 2022, and a 2.6% increase on last month, June 2023. Average prices of 10-15-year-old cars (£6,634) are up a slightly more conservative 1.4% MoM but have increased a whopping 11.1% YoY. This is on top of the year-on-year 26.5% growth recorded a year earlier in July 2022.
The increase is being fuelled, in part, by supply pressures dominating robust consumer appetite, with current levels of demand (up 19% YoY [1]) outpacing the availability of stock (up 7% YoY[2]). The constraints in supply of older age cohorts today is the result of the financial crisis of 2008, where volumes of brand-new cars were slower to flow through into the retail market.
The only age cohort to record a contraction in value this month are those vehicles aged 1-3-years-old, with the average retail price (£27,003) currently down -2.0% on last year. This softening is being driven by the ongoing drop in the value of low emission vehicles which are dragging back the average values for this age group of cars. In fact, whilst the retail value of petrol and diesel cars aged 1-3-years-old have both increased 3%YoY, their plug-in-hybrid and electric counterparts have fallen -15% and -24% respectively.
Electric retail values continue to contract, but stabilising as supply surge slows.
This disparity between traditionally and alternatively fuelled cars is consistent with the wider retail market. With the rate of supply growth (+174% YoY) continuing to outpace the otherwise robust levels of growth in consumer demand (+6% YoY), electric vehicle retail prices (across all ages) are still contracting on a YoY basis, with current values (£31,622) down -20.7% on last year. In contrast, the average retail price of a used petrol (£16,519) and diesel (£16,570) car, of any age group, is up 5.2% and 5.1% YoY respectively.
There are clear indications however, that the market is stabilising, with this month recording the lowest level of MoM contraction since August 2022[3]. At -0.1% this month (to date), it’s a marked improvement on the -0.9% MoM recorded in June, -1.5% in May, and the -1.6% in April. This has been helped by slowing levels of supply into the market, as retailers sell through available cars.
In terms of the speed in which they’re sold, electric vehicles have gone from being the fastest to leave retailers’ forecourts (up until late summer of last year), to being substantially slower than any other fuel-type. However, due to these improving supply and demand dynamics, as well as finding a price point that’s attracting sufficient numbers of car buyers to meet the increased levels of supply, EVs are now leaving forecourts much faster. In fact, the current speed of sale is on par with petrol cars, at just 30 days, making them the joint fastest selling fuel type, and the fastest speed of sale for electric vehicles in nine months.
Average retail prices have been increasing for 40 consecutive months, but since the start of the year we’ve seen a steady acceleration in retail price growth. Although this has slowed slightly, it’s not an indication of a market in reverse, and anyone anticipating a drop in retail prices anytime soon will be sorely disappointed. Despite the economic headwinds, demand remains buoyant, which combined with the ongoing constraints on new and second-hand car supply, will keep retail values stable.
“Increasing used car prices does have the potential to place added pressure on motorists who are already feeling the squeeze on their household finances. However, most car buyers should be insulated if they have a car to sell or to exchange, as it’s not just the price of the car on retailers’ forecourts that are rising, so too is the car on driveways, and in many instances likely to be worth considerably more than expected.”
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), added:
“The used car market continues to function in good stead; values are rising, supply is improving, and demand is robust. Electric vehicle prices are also stabilising which is positive, the price parity between EVs and ICE has always been one of the significant barriers to adoption for motorists. With used EV prices declining and edging increasingly closer to the price range of consumer budgets, the data is starting to show an uptick in demand, opening doors of opportunity for retailers to take advantage of this market.”
Top 10 used car price growth (all fuel types) | July MtD (up to 20th) 2023 vs July 2022 like-for-like
Top 10 used car price contraction (all fuel types) | July MtD (up to 20th) 2023 vs July 2022 like-for-like
[1] Based on consumer engagement on Auto Trader
[2] Supply and demand based on stock levels on Auto Trader and on-site consumer behaviour.
[3] August 2022 MoM growth = +0.4%
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: https://plc.autotrader.co.uk/
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Andrew Nankervis | Andrew.Nankervis@autotrader.co.uk 07720 896760
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