Retail Price Index | May 2022
Used car price growth remains at record levels, but demand softens on record 2021
The latest data from the Auto Trader Retail Price Index (RPI), which is based on daily pricing analysis of circa 900,000 vehicles, revealed that the average price of a used car increased 32.2% on a year-on-year (YoY) and like-for-like basis in April. Although it marks the 25th month of consecutive YoY price growth, it points to a slowing market, with the rate of growth increasing just a fraction on the 32% YoY recorded in March.
Highlighting the scale and accuracy of Auto Trader’s data, it will soon be used by the Office of National Statistics (ONS) to make its measures of inflation more robust, including the Consumer Prices Index, as part of its programme of transformation across its consumer price statistics.
The slight slowdown in price growth is the result of a number of factors, not least the fact that growth is now overlapping last year’s already very strong levels (7.1%). Further contributing factors include a softening in consumer demand, which has been fuelled by the rising cost of living, growing consumer concerns around the economy and the prospect of a significant reduction in disposable incomes.
However, whilst consumer demand has begun to decline, any comparisons made with 2021 will be heavily distorted due to the exceptional and ‘once in a lifetime’ levels the market experienced last year as we exited the third UK COVID lock-down with a high level of pent-up demand. It would be more accurate to compare the current market with pre-pandemic levels, and according to the latest data from Auto Trader, audience and activity on site remains strong, with the volume of advert views on its marketplace increasing 17% on April 2019. Any suggestion therefore that the market is in reverse is incorrect; rather, it is returning to more typical market conditions.
Whilst the huge growth in used car prices may continue to flatten out over the coming months, there’s certainly no indication in current data that prices are set to tumble. That’s because the same market dynamics that helped fuel the record acceleration in growth are still at play, albeit to a less dramatic extent. In addition to robust levels of consumer demand in the market, supply challenges are set to remain, both due to new car constraints predicted to last until the end of the year at the earliest, and the used car market still seeing suppressed supply as a result of the last two years of lower new car sales.
Although increasing inflation could yet prove to be a potential headwind, the latest Auto Trader analysis and consumer research points to the fact that inflation rates are having a smaller impact on the market than some commentators are predicting. Firstly, analysis of the data from the last two decades at least shows that inflation has had very little influence on used car transactions. What’s more, confidence amongst ‘in market’ consumers remain strong, with two thirds (66%) of those surveyed in April stating they intended to make a car purchase in the next three months, which is consistent with the last 12 months. And in separate research, the majority of those consumers who are currently in the market to buy a new or used car said that the rising cost of living wouldn’t impact their timelines (53%[1]) or budget (48%)[2].
Auto Trader on-site data – actual consumer behaviour - supports these findings. Whilst the increase in used car prices has moved available cars into higher price bands over the last year, consumers haven’t adjusted their budgets to keep up. In fact, the mix of advert views on Auto Trader by price has broadly remained the same over the last 12 months. This suggests that while cars have increased in price and shifted upwards over recent months, consumer budgets have not shifted in the same way. Consumers appear to be looking at similarly priced cars, but the pricing movements seen recently mean that the cars they’re looking at are from what were previously lower priced “buckets”.
Some segments outperforming wider market
Looking at the pricing data on a more granular level, it’s evident that specific market segments can show variable trends determined by different market dynamics, which highlights the need for the industry to look beyond the national average view. For example, on a month-on-month basis, the average 10-15-year-old petrol saloon saw a price increase of 5.4%, whilst a petrol saloon car aged 3-5-years-old, saw prices contract almost 1.5% over the same period.
In such a fast-moving market, it’s easy to lose sight of just how exceptional 2021 was for the industry, but context is critical and any suggestion that the used car market is in reverse or prices are set to tumble, is at best an oversimplification, and at worst a misinterpretation of the data.
“Whilst stock limitations have impacted sales, compared to ‘normal’ pre-pandemic conditions, consumer demand, engagement, and prices all remain robust, which in turn is helping to drive strong margins. Our data highlights many segments of the market are perform at varying degrees – it’s vital therefore that during this period of turbulence, retailers look beyond a national average view and adopt a strategy that is led by data to identify and to focus on those areas where they can win.”
Sue Robinson, Chief Executive, NFDA, added: “Despite a stabilisation mainly due to the cost-of-living increases affecting UK households’ finances, it is encouraging that demand for used vehicles remains above pre-pandemic. As a result, despite a slight slowdown in growth, used car prices are still at high levels. It is positive that electric cars continue to perform well as franchised dealers work hard to help their customers to switch to a greener vehicle”.
Top 10 price growth (all fuel types) | April 2022 vs April 2021 like-for-like
Such is the current health of the used car market, just one of the lowest performing models has seen its price contract.
|
Ranks |
Make |
Model |
Apr-22 Average Asking Price |
Price Change (YoY) |
|
|
1 |
Renault |
Scenic |
£8,107 |
61.1% |
|
|
2 |
SEAT |
Alhambra |
£18,706 |
59.8% |
|
|
3 |
Toyota |
Auris |
£12,745 |
54.5% |
|
|
4 |
Ford |
S-Max |
£15,636 |
53.9% |
|
|
5 |
Ford |
Galaxy |
£16,766 |
52.3% |
|
|
6 |
Toyota |
Prius |
£16,121 |
51.4% |
|
|
7 |
SKODA |
Octavia |
£16,029 |
50.8% |
|
|
8 |
Ford |
Grand C-Max |
£12,511 |
49.8% |
|
|
9 |
Ford |
C-Max |
£10,530 |
49.2% |
|
|
10 |
Vauxhall |
Zafira Tourer |
£12,047 |
49.1% |
|
Top 10 price contraction (all fuel types) | April 2022 vs April 2021 like-for-like
|
Rank |
Make |
Model |
Apr-22 Average Asking Price |
Price Change |
|
|
10 |
Aston Martin |
DB11 |
£106,986 |
5.6% |
|
|
9 |
Porsche |
Cayman |
£35,749 |
5.5% |
|
|
8 |
MINI |
Roadster |
£8,444 |
3.7% |
|
|
7 |
Mercedes-Benz |
G Class |
£93,149 |
3.4% |
|
|
6 |
Land Rover |
Discovery 3 |
£8,333 |
2.8% |
|
|
5 |
BMW |
8 Series |
£56,488 |
1.7% |
|
|
4 |
Vauxhall |
Mokka |
£11,983 |
1.4% |
|
|
3 |
BMW |
8 Series Gran Coupe |
£59,964 |
1.3% |
|
|
2 |
CUPRA |
Formentor |
£35,579 |
1.1% |
|
|
1 |
Porsche |
Taycan |
£121,158 |
-4.7% |
|
[1] In a study of 1059 in-market consumers, 53% said ‘no, it hasn’t impacted my timeline’
[2] In a study of 948 in-market consumers, 48% said ‘no, it hasn’t impacted how much I want to spend’
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