Retail Price Index | August 2021
Used car price growth doubles in three months as demand shows no sighs of slowing
According to the latest results from the Auto Trader Retail Price Index, which is based on daily pricing analysis of circa 900,000 vehicles, price growth reached another all-time high last month, reaching a 17.2% year-on-year (YoY) and like-for-like increase. Such is the current strength of the used car market, it not only represents the largest single month-on-month increase (up from 14.1% in July), but it’s more than double the rate of growth recorded in May, surging from an already very strong 8.1%.
This sharp acceleration has been fuelled by the massive levels of consumer demand in the market, which is reflected in the huge growth in traffic to Auto Trader over recent months. In fact, in August, there were 70.2 million cross platform visits, representing a 36.4% increase on the same period in 2019; it marks a record level of August consumer demand, and the second highest number of monthly visits ever recorded. What’s more, consumers spent 10 million hours researching their next car on the marketplace, which is an 18% increase on 2019.
Price growth has also been affected by ongoing used car supply challenges: according to the Auto Trader Market Insight tool, which is free to use for all retailers, supply was down -12% last month when compared to August 2019.
Consumer sentiment survey points to sustained demand
Auto Trader’s latest consumer sentiment survey, conducted in August, shows that out of circa 2,200 car buyers, 25% intend to buy within the next three months, whilst 39% intend to buy within two weeks. The research provides further evidence of sustained levels of consumer demand in the market, with 26% of those surveyed believing car ownership is more important today than it was pre-COVID, whilst 50% feel more confident in their ability to afford their next car than they did a year ago.
Such is its confidence in the health of the used car market, Auto Trader predicts a total of circa 8 million used car sales in 2021, which is significantly higher than other commentators, but is a more accurate reflection of current levels of consumer demand.
Commenting on the results, Auto Trader’s director of data and insight, Richard Walker, said: “To put the price movement into context, in August 2020 average prices were increasing at a rate of 6% year-on-year, which at the time marked a new record. Whilst few could have imagined a year later, growth would be accelerating at nearly three times that rate, we’ve said throughout the pandemic that we anticipated sustained levels of growth fuelled by the strong consumer demand in the market, even when other commentators precited a collapse in prices. It reinforces the importance of being data led in all aspects of your business, especially when the market is moving so quickly.
“The data still indicates exceptionally strong levels of used car demand, which has been given an additional boost from the ongoing new car supply constraints. With what we’re observing we expect the growth rate to continue for some time to come.”
Fewer retailers adjusting prices in response to market health
Reflecting the strength of the market, Auto Trader continues to see fewer retailers adjusting prices on fewer vehicles. An average of 1,987 retailers made daily price adjustments in August, which is 409 fewer than the same period in 2019. What’s more, an average of 9,742 vehicles were repriced every day last month, which is a massive 32% fewer when compared to 2019. The data also suggests retailers were making significantly smaller reductions to sticker prices, averaging at just -£51, compared to the average reduction of -£336 made in 2019.
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), said: “The extraordinary increase in used car prices shows that consumer demand remains extremely buoyant supported by dealers’ optimism. As supply issues affect the new car market and consumer confidence improves, second-hand and nearly new car transactions are expected to continue to perform well over the coming months.”
Prices for used premium EVs contract, but high price tags remain out of reach for most
Looking at prices more granularly, like-for-like prices for both used petrol and diesel cars continue to reach record levels, with the average price of a used petrol car increasing 16.9% YoY last month (up from 13.5% in July), whilst used diesels increased a huge 18.7% (up from 16.2%). Average sticker prices were £13,988 and £15,396 respectively.
Like-for-like prices for both used volume[i] and used premium [ii] electric vehicles (EV) recorded positive month-on-month movements last month, with EV volume brands seeing the highest increase amongst all fuel types, rising from 9.6% YoY growth in July to 13.2% (£24,056). Used premium EV brand prices remain negative YoY, but also saw a positive monthly movement, from -6.3% to -5.5% (£44,794).
The reason for this disparity is due to supply and demand: YoY demand continues to outstrip levels of supply in the EV volume market (104.2% vs 41% respectively) leading to positive price growth. Conversely, YoY supply continues to outstrip demand in the premium market (135% vs 107%), which is leading to the negative pricing.
Top 10 price growth | August 2021
Top 10 price contraction | August 2021
[i] Volume EV brands categorised as: Ford, Volkswagen, Vauxhall, Peugeot, Nissan, Citroen, Kia, Hyundai, MG, Renault, SEAT, SKODA, Honda, Toyota, Fiat, Suzuki, Mazda, Mitsubishi, Smart, Dacia, Jeep, Subaru
[ii] Premium EV brands categorised as: Audi, BMW, Mercedes-Benz, Land Rover, Jaguar, Tesla, Volvo, MINI, DS AUTOMOBILES, Lexus, Abarth, Alfa Romeo
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