Retail Price Index | February 2022
Used car price growth hits another all time high as record trajectory shows signs of stabilising
The latest Auto Trader Retail Price Index, which is based on daily pricing analysis of circa 900,000 vehicles, revealed that average used car prices are continuing to increase to record levels, with the average sticker price increasing 31.9% on a year-on-year and like-for-like basis in February. It marks the 23rd month of consecutive price growth.
Whilst it’s another month of record growth, the 0.6% rise on the 31.3% recorded in January represents the lowest monthly increase since April 2021, which was the point at which the already strong levels of price growth began to accelerate dramatically in response to the world-wide shortage in semi-conductors. Since then, the average price of a used car has increased nearly £4,000[1], and such is the level of acceleration last year the market recorded five years’ worth of growth condensed into just eight months.
As YoY prices begin to overlap with previous highs (February 2021 was up 6.6% YoY), a slight easing in the levels of growth is to be expected. However, it is not an indication of a market in reverse. Whilst there are potential headwinds, such as growing inflation and the possible impact of the conflict in Ukraine, consumer demand remains robust, as reflected in the 12% increase in the volume of enquiries sent to retailers through the Auto Trader platform last month when compared to February 2021 (and 19% on pre-pandemic February 2020). What’s more, the speed in which used cars are selling has also accelerated significantly, with the average car taking 11 days fewer to leave forecourts in February 2022 when compared to the same period last year (27 days vs 38). Combined with the ongoing pressures on new and used car supply, which the current conflict may constrain even further, these market dynamics will ensure used car prices remain high for some time to come.
One in five ‘nearly new’ cars priced above brand new equivalents
Further highlighting just how strong the used car market is, more than one in five (21%) of the nearly new cars currently available (those aged up to 12 months) are more expensive than their brand-new equivalents. This unprecedented situation is down to the same dynamics affecting the wider used car market i.e. very high demand – in this case from car buyers unable or unwilling to wait for a brand-new car to become available – coupled with very low supply of both new and nearly new cars. Remarkably, despite these unprecedented pricing dynamics between new and used cars, nearly new cars were selling on average 24 days faster last month than in February 2021 (30 days vs 54).
Despite some early indications that the huge acceleration in price growth that we’ve been tracking since the spring of last year is starting to stabilise, no one should be mistaken into thinking this is the start of a fall in prices. Far from it. Used car values have been affected by strong levels of consumer demand in the market, combined with the ongoing new and used supply constraints, neither of which show any sign of slowing. Any suggestion therefore of a bubble bursting is based on pure speculation, and not the data, which clearly points to very high prices remaining for quite some time to come.
EV demand surges ahead of ICE
Internal combustion engine vehicles saw levels of supply fall further last month as global chip shortages in the new car market continued to constrain used car availability, with the number of used petrol and diesel cars in the market dropping -5.2% and -14.4% year-on-year respectively. Whilst levels of consumer demand also dipped, decreasing -3.3% and -12.2% respectively, they remained above supply, and as a result, like-for-like prices for both used petrol and diesel cars performed very positively. The average price of a petrol car (£16,676) increased by 33.6% YoY and the price of a diesel car (£17,680) increased 31.7%.
Meanwhile, the average price of a volume[2] brand electric vehicle (EV) increased by 32.2% YoY (£26,220), whilst the average price of a [3]premium brand EV recorded a more conservative 19.6% (£50,653) increase. YoY demand saw downward month-on-month movements for both but remain exceptionally high with volume EV brands up 43.2% YoY (down from 77.4% YoY in January) and premium EV brands up 19% YoY (down from 41.9% YoY).
More retailers pricing to market
Auto Trader is seeing retailers become more active in adjusting their forecourt prices to reflect the fast-changing retail market. On average, 2,424 retailers made daily price adjustments in February, which is 30 fewer than the same period last year, but over 200 more than in January. What’s more, an average of 17,045 vehicles were repriced every day last month, which was circa 100 more than February 2021. The average price reduction was -£283, which was -£17 more than in February 2021, but based on the 31.9% increase in used car prices over the last 12 months, it represents a far smaller proportion of the total price.
Richard continued: “It’s very reassuring to see more businesses base their pricing strategy on the data - with today’s retail market moving so quickly, it’s never been more important to do so to ensure you’re getting the very best margin for your stock. Although retailers are making reductions, it’s worth bearing in mind that average prices have rocketed over 30% year-on-year, and so the adjustments are incredibly small, and highlights just how confident retailers are in the health of the market.”
Sue Robinson, Chief Executive, NFDA, added: "Despite signs of stabilisation as shown by the lowest month on month increase in price since last year, used car prices continue to grow. Franchised dealers are confident as, whilst supply issues impact the new and used market, consumer demand remains strong with the ever-growing appetite for electric vehicles.”
Top 10 price growth (all fuel types) | February 2022 vs February 2021 like-for-like
Such is the strength of the used car market, just one of the lowest performing models has seen prices contract.
|
Ranks |
Make |
Model |
Feb-22 Average Asking Price |
Price Change (YoY) |
|
|
1 |
SEAT |
Alhambra |
£18,873 |
56.4% |
|
|
2 |
Ford |
S-Max |
£15,048 |
52.8% |
|
|
3 |
Toyota |
Auris |
£13,253 |
50.5% |
|
|
4 |
SKODA |
Yeti |
£12,991 |
50.3% |
|
|
5 |
Ford |
Grand C-Max |
£12,554 |
48.9% |
|
|
6 |
Ford |
Galaxy |
£17,086 |
48.8% |
|
|
7 |
Renault |
Grand Scenic |
£10,698 |
48.3% |
|
|
8 |
SKODA |
Octavia |
£16,796 |
48.2% |
|
|
9 |
Land Rover |
Defender 110 |
£82,463 |
47.5% |
|
|
10 |
Toyota |
Yaris |
£14,003 |
47.2% |
|
Top 10 price contraction (all fuel types) | February 2022 vs February 2021 like-for-like
|
Rank |
Make |
Model |
Feb-22 Average Asking Price |
Price Change |
|
|
10 |
Tesla |
Model 3 |
£47,821 |
5.8% |
|
|
9 |
Vauxhall |
Antara |
£5,837 |
5.6% |
|
|
8 |
Mazda |
CX-30 |
£24,824 |
5.6% |
|
|
7 |
Subaru |
Forester |
£21,384 |
5.2% |
|
|
6 |
Audi |
e-tron |
£64,018 |
4.7% |
|
|
5 |
Volvo |
V50 |
£4,511 |
4.6% |
|
|
4 |
DS AUTOMOBILES |
DS 3 CROSSBACK |
£21,936 |
4.3% |
|
|
3 |
BMW |
8 Series Gran Coupe |
£61,215 |
2.0% |
|
|
2 |
CUPRA |
Formentor |
£35,875 |
0.9% |
|
|
1 |
Porsche |
Taycan |
£118,868 |
-2.3% |
|
[1] Up from £13,973
[2] 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
[3] 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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