Retail Price Index | February 2023
Momentum continues in February as both new and used car prices record growth
According to the latest data from the Auto Trader Retail Price Index, which is based on circa 900,000 pricing observations across the automotive retail market, the average retail value of a used car was £17,654 in February, which represents a 1.3% increase on a year-on-year (YoY) and a like-for-like basis. It marks the 35th month of consecutive YoY price growth.
Whilst down on last year’s record highs, it builds on the huge (and near record) 32% YoY growth recorded in February 2022. By applying a longer-term view, it’s clear just how strong used car values currently are, having increased circa £4,000[i] since the start of the pandemic. February also marked a 0.3% month-on-month increase, highlighting the current strength of the used car market more broadly, and its positive trajectory following the usual festive slowdown.
Prices have remained robust due to the ongoing demand and supply dynamics in the market. Overall levels of consumer demand remain robust, which is reflected in the very strong consumer engagement on Auto Trader. In January, there was a 14% YoY increase in the volume of cross platform visits to its marketplace; reassuringly, this momentum has continued into February, with the volume increasing a massive 17% on the same period last year.
The strong level of demand in the market, coupled with the ongoing shortfall in stock fuelled by the dearth in new car supply, is keeping second-hand car prices stable and supporting a healthy and profitable used car market. And with no indication of these dynamics shifting anytime soon, we remain confident for the months ahead.
What’s happening with new car RRPs?
As well as the recent rise in average used car retail values, Auto Trader’s data, which is based on new car derivatives of all manufacturers in the UK[ii], reveals a significant increase in new car recommended retail prices (RRP). In just five years, average RRPs have risen a whopping 43%, from an average of £27,305 in January 2018, to £39,038 in January 2023. Over the course of the pandemic, RRPs have risen 22%[iii] and in the last year alone have shot up 9%[iv].
Whilst new car stock available to buy in the UK remains circa 60% below the record levels recorded in early 2021 (before the market felt the impact of the worldwide shortage of semiconductors), volumes have gradually improved over the last 12 months, increasing 31% YoY in February.
However, it’s the brand-wide shift in the type of vehicles being sold over recent years which is fuelling new car price rises. Not only has the number of new car models available to buy in the UK increased over the last five years, but the mix of body styles and fuel types has changed significantly, shifting towards more expensive vehicles, such as SUVs and low emission cars.
But it's the changed mix of fuel types that has had the biggest impact on new car prices. As a proportion of the total new car derivatives available in the UK[v], the share of the more expensive electric cars has increased from 1% to 12% between January 2018 to January 2023, whilst petrol hybrids has grown from 2% to 14%. Conversely, in January 2018 diesel accounted for 46% of the total number of brand-new cars to buy, but today its shrunk to just 17%. And in terms of body types, SUVs have nearly doubled, increasing from 21% of all new cars to buy in January 2018, to 41% in 2023. Hatchbacks have fallen from nearly a third (31%) to just over one in five (22%) over the same period.
Running in parallel to these price increases, inflation has resulted in a significant rise in the cost of borrowing, with the Bank of England’s base rate increasing from 0.5% to 4.0% over the last year. This has been reflected in average new car APRs powering finance calculators on Auto Trader which have risen from 5.1% in January 2022, to 8.1% at the start of this year.
Walker added: “Given higher prices, lower discounts, and increased borrowing rates, retail demand for new cars softened during the closing months of last year. Reassuringly, however, along with the very positive momentum we’re tracking in the used car market, we’re seeing new car demand begin to pick back up. And so, despite the broader economic headwinds, we fully expect any increase in new car supply over the coming months will be met with healthy levels of consumer appetite. As we have consistently seen over the last few years, where there’s stock, there’s sales.”
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), commented: “Auto Trader’s data continues to promote the automotive retail sector with growing confidence. Used cars values have reported 35 consecutive months of year-on-year growth which is extremely positive for retailers that are continuing to capitalise on this. It’s fascinating to see the growth in new car recommended retail prices. Manufacturers are now reporting increased levels in stock production reaching forecourts, so it will be interesting to see whether this has any impact on prices over the coming months.”
Top 10 used car price growth (all fuel types) | February 2023 vs February 2023 like-for-like
Top 10 used car price contraction (all fuel types) | February 2023 vs February 2023 like-for-like
[i] Versus average February 2020 used car price: £13,622
[ii] 3,730 new car derivatives in Jan-2023
[iii] Up from £32,070 in January 2020
[iv] Up from £35,770 in January 2022
[v] Based on new car stock mix on Auto Trader
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 900,000 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 and Ireland's largest digital automotive marketplace. Auto Trader listed on the London Stock Exchange in March 2015 and is now a member of the FTSE 100 Index.
The marketplace sits at the heart of the vehicle buying and selling journeys, with the largest number of car buyers and the largest choice of trusted stock. Auto Trader exists to Drive Change Together. Responsibly. It aims to grow both its car buying audience and core advertising business and is focused on changing how the UK shops for cars by providing the best online car buying experience, enabling all retailers to sell online. It aims to build stronger partnerships with its customers, use its voice and influence to drive more environmentally friendly vehicle choices and create a diverse business and inclusive culture.
Auto Trader publishes a monthly used car Retail Price Index which is based on daily pricing analysis of circa 900,000 vehicles, this data is used by the Bank of England and ONS to feed the broader UK economic indicators such as inflation and the CPI.
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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