Retail Price Index | January 2023
Confident outlook for the year ahead as healthy demand sends used car prices upwards in January
According to the latest data from the Auto Trader Retail Price Index, which is based on daily pricing analysis of circa 900,000 vehicles across the retail market, the average retail price of a used car was £18,119 in January. It marks a 2.7% year-on-year (YoY) increase on a like-for-like basis, and the 34th month of consecutive price growth.
Although the rate of YoY pricing growth is continuing to slow (now at the lowest rate since exiting Covid lockdown in May 2020[1]), it builds on the massive 31.3% recorded in January last year and highlights the continuing robustness of the market. And highlighting just how steeply and quickly average used car values have climbed, the average price in May 2020 was a comparatively low £13,931; over £4,000 less than average values today. Following the seasonal slowdown over the festive period, January also saw average prices increase on a month-on-month basis, rising 0.2% on December.
The current stability in used car prices continues to be driven by the combination of robust consumer demand, and the ongoing squeeze in supply. This is reflected in Auto Trader’s marketplace data, which shows that whilst the volume of cross platform visits increased 14% last month against January 2022 (the third consecutive month of YoY growth), while supply[2] fell by -5% over the same period.
Demand for older stock sends prices skywards
A good indicator of market health is the speed in which used cars are leaving retailers’ forecourts. Auto Trader’s data shows that used cars took an average of 40 days to sell in January, which is just one day slower than last year (39), but faster than pre-pandemic averages[3]. On average older cars were leaving forecourts the fastest in January, with those aged 10-15 years taking just 35 days, whilst 5–10-year-old-cars took a similarly above market average of 36. The slowest age cohort to sell, however, was 1-3-year-old-cars, which took an average of 47 days.
Looking at the pricing data at a more granular level, the growing demand for older and cheaper stock is not only resulting in a faster speed of sale for older age cohorts, but also stronger levels of price growth. Those cars aged 10-15 years old (which had an average value of £6,325 last month) increased 0.5% between December and January, and on a year-on-year basis, were up a whopping 10.9%. Younger cars, however, have followed a trajectory more aligned to the broader retail market, with those aged up to a year-old (£36,640) increasing 0.2% MoM, whilst 1-3-year-old cars (£28,019) dropped -0.3%.
Used ICE prices heat up as EV’s continue to cool
As a result of a dramatic acceleration in levels of electric vehicle (EV) supply (surging from just 2% of all used cars advertised on Auto Trader in June, to over 6% in January) past consumer demand which has been flattened recently by rising energy prices
To help correct this trend, and to avoid more than just a small pothole on the road to 2030, more action will be required from both the government and industry. The used EV market will play a vital role in driving mass adoption of electric cars, and unless more consumers are prepared to take a risk with second-hand alternatives, new EV targets will be harder to achieve - if retailers lose confidence in their used stock, new models will become increasingly difficult to sell. Encouraging car buyers into used EVs through incentives, marketing and education to demystify them (including helping to correct myths around battery degradation and reliability) will be critical.
Uptick in consumer confidence points to used car stability in 2023
Despite the uncertain economic and political back drop, consumer confidence continues to show signs of improvement. In fact, both the YouGov[4] and GFK[5] consumer confidence trackers reported an uptick in December. This is reflected in Auto Trader’s own consumer research, which shows that more than three quarters (78%) of the circa 1,900 in-market car buyers surveyed in January are planning on buying in the next six months, and 27% in the next three months. What’s more, over 80% of visitors to Auto Trader’s platforms are at least as confident as they were at this time last year in being able to afford their next car. This percentage has stayed strong for UK car buyers on Auto Trader over the last six months.
It’s hard to ignore the current political and economic disruption, but based on what we’re tracking, it’s having a very limited impact on the retail market. Crucially, demand for used cars remains robust, which along with the ongoing constraints in supply, is keeping prices stable, and with it, profits healthy. However, as our data highlights, the market is incredibly nuanced, and fluctuations in supply or demand can have an impact at a very granular level. It’s critical then, that retailers follow the data carefully to secure the very best margin possible.
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), added: “The used car market has entered 2023 with continued resilience, values have remained stable, and demand is buoyant. Franchised and independent dealers selling used car vehicles are looking to the year ahead with optimism after successful trading in January, and there’s little to suggest that there will be any drastic changes to the market any time soon.”
Top 10 price growth (all fuel types) | January 2023 vs January 2022 like-for-like
Top 10 price contraction (all fuel types) | January 2023 vs January 2022 like-for-like
[1] Average prices increased 1.9% year-on-year in May 2020
[2] Determined by the volume of advertised stock on Auto Trader
[3] It took an average of 42 days for a car to sell in January 2019
[4] https://yougov.co.uk/topics/consumer/articles-reports/2023/01/17/consumer-confidence-sees-small-new-year-bounce-out
[5] https://www.gfk.com/press/UK-Consumer-confidence-up-two-points-in-December
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 other financial institutions to feed the broader UK economic indicators.
For more information, please visit https://plc.autotrader.co.uk/
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