Record visits in January marks confident start to the year, but retail prices soften as under pricing of 'best of the best' stock risks profit potential
The used car market saw a confident start to the new year, with both transactions and consumer demand recording growth in January, as highlighted by the record 85.5 million visits to Auto Trader’s marketplace. However, whilst retail prices are showing signs of stabilising, Auto Trader’s Retail Price Index reveals a drop of -7.5% year-on-year (YoY) and like-for-like in January as average prices continue to be pulled down by under-pricing of exceptionally high demand stock, fuelled by recent trends in wholesale values.
Levels of consumer demand[1] on Auto Trader remained buoyant in January, increasing 6.1% YoY, and well ahead of supply, which recorded a growth of just 1.2%. As a result, Auto Trader’s Market Health metric, which assesses potential market profitability based on supply and demand dynamics, rose to a healthy 4.8% on January 2023.
Robust consumer appetite was also evident in the record traffic to Auto Trader’s marketplace, which last month saw a total of over 85.5 million cross platform visits; a huge 27.5%[2] increase on December, and 6.4% on the 80.4 million recorded in January 2023 (a then record). Crucially, this demand was translated into transactions, with early indications from Auto Trader’s retail sales data suggesting a 1.6% increase in used car sales compared to last year.
Despite such strong market fundamentals, however, a proportion of high-demand stock is still being under-priced on Auto Trader, although reassuringly, at a slowing rate from recent highs. Currently, circa 46,000 cars with a high Retail Rating[3] (a unique, machine learning derived measure of how fast a car is likely to sell if priced at its market value) score of over 61 have been advertised below their market average from the first day of being listed. As a result, a potential profit of around £30m is being missed.
Looking at the data at a more granular level reveals that many of even the most in-demand vehicles in the market are being priced below their retail value. In fact, 3,400 retailers are choosing to list circa 9,300 of the ‘best-of-the-best’ cars (with a Retail Rating above 81) on Auto Trader below 95% of their respective market average. It represents a potential profit opportunity for retailers of circa £8m.
Nuanced retail market
Highlighting the nuance in the retail market, the average price of sub three-year-old (£28,031) cars are down -9.7% YoY (hampered by the ongoing de-fleeting of the circa 750,000 electric vehicles sold over the last three years),, whilst those aged 3-5-years (£19,114) and 5-10-years (£13,352) saw a decline of -9.2% and -4.8% respectively. Used cars aged over 10-years-old, however, are still recording positive price growth, with 10–15-year-old vehicles up 3.7% YoY to £6,457.
When we look at fuel type, prices for electric vehicles are down -21.8% YoY (£28,836), whilst petrol (£15,256) and diesel (£15,111) are down -6.2% and -5.8% respectively. This is despite very favourable market dynamics; across all fuel types, levels of demand growth is outpacing supply, which under normal conditions would maintain price stability. This is especially evident in electric vehicles, where demand growth has increased a massive 65%, whilst levels of supply, is down -2.4%, resulting in Auto Trader’s Market Health metric rising a whopping 69%.
As well as our own metrics, it’s reassuring to see broader economic indicators pointing to stable and robust market conditions, including the latest consumer confidence data, which reached a two-year high in January.
Walker continued: "Although fewer than we’ve seen previously, given such positive market fundamentals, it’s disappointing to still see stock being priced under their true market value, particularly what we would call the best-of-the-best. By not applying a retail-back approach to pricing, retailers are at risk of selling themselves short and missing out on significant profit opportunities.”
Top 10 used car price growth (all fuel types) | January 2024 vs January 2023 like-for-like
|
Ranks |
Make |
Model |
Jan 24 Average Asking Price |
Price Change (YoY) |
Price Change |
|
|
1 |
Volkswagen |
Beetle |
£7,849 |
10.5% |
-0.2% |
|
|
2 |
Suzuki |
Jimny |
£12,268 |
8.2% |
2.0% |
|
|
3 |
Toyota |
Land Cruiser |
£32,849 |
6.4% |
-0.3% |
|
|
4 |
Jeep |
Grand Cherokee |
£16,172 |
6.0% |
-1.6% |
|
|
5 |
Mercedes-Benz |
M Class |
£11,719 |
4.6% |
-2.7% |
|
|
6 |
Dacia |
Sandero |
£8,305 |
4.4% |
-1.4% |
|
|
7 |
Dacia |
Sandero Stepway |
£9,566 |
4.0% |
-1.9% |
|
|
8 |
Audi |
RS4 Avant |
£45,258 |
4.0% |
-1.0% |
|
|
9 |
Volvo |
V70 |
£7,461 |
3.9% |
-2.3% |
|
|
10 |
Peugeot |
Partner Tepee |
£9,185 |
3.8% |
-2.1% |
|
Top 10 used car price contraction (all fuel types) | January 2024 vs January 2023 like-for-like
|
Rank |
Make |
Model |
Jan 24 Average Asking Price |
Price Change |
Price Change (MoM) |
|
10 |
Hyundai |
KONA |
£18,308 |
-19.0% |
-3.4% |
|
9 |
Volkswagen |
ID.4 |
£34,110 |
-19.1% |
-3.1% |
|
8 |
Porsche |
Taycan |
£84,572 |
-19.5% |
-0.1% |
|
7 |
BMW |
i4 |
£49,476 |
-20.0% |
-0.7% |
|
6 |
DS AUTOMOBILES |
DS 3 CROSSBACK |
£15,209 |
-20.9% |
-3.8% |
|
5 |
Fiat |
500e |
£19,668 |
-22.6% |
-3.0% |
|
4 |
Tesla |
Model S |
£30,613 |
-23.9% |
-3.1% |
|
3 |
BMW |
i3 |
£16,283 |
-24.4% |
-2.6% |
|
2 |
Hyundai |
IONIQ |
£14,969 |
-24.5% |
-2.8% |
|
1 |
Volkswagen |
ID.3 |
£24,884 |
-24.7% |
-2.8% |
[1] Determined by the volume of search and advert views.
[2] 67 million visits in December 2023 and 80.4 million visits in January 2023.
[3] Retail Rating considers a number of factors, including Average Days to Sell and Supply and Demand, to score the vehicle between 1-100. The higher the Retail Rating, the quicker the vehicle is expected to sell.
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