RETAIL PRICES RETURN TO SEASONAL NORMS AS RISING USED CAR DEMAND SPARKS SALES UPTICK
According to the latest data from Auto Trader, the used car market recorded very robust levels of consumer demand, speed of sale, and transactions in May. As a result of the strong underlying health of the used car market, average retail prices have returned to seasonal trends, softening -0.7% on a month-on-month (MoM) and like-for-like basis. Apart from the pandemic influenced 2020 and 2021, retail prices have dipped every May following an April uptick since Auto Trader first began tracking retail prices in 2011.
Demonstrating the strength of the used car market, Auto Trader recorded nearly 83 million visits to its platform in May, which is an increase of circa 11% on the same period last year, and an almost 20% rise since May 2022. Increased engagement is being driven by growing levels of consumer demand, which according to Auto Trader’s data, rose 8.6% year-on-year (YoY) in May.
Current demand is further highlighted by the current speed at which used cars are selling. It took an average of just 29 days for a used car to sell in May, which is one day slower than in April, but one day faster than the same period last year. Highlighting the nuance of the retail market, cars sold even faster within certain segments; for example, volume brands took an average of 27 days to sell, whilst 3-5-year-old cars left retailers’ forecourts in just 26.
Although down slightly on the 9% YoY increase recorded in April, Auto Trader’s retail sales data indicates used car transactions rose an otherwise significant circa 6% last month, fuelled by the very robust demand in the market.
Supply softens as middle of market squeezed
Following eight months of growth in used car supply, the volume of stock in the market fell -1.1% in April. This downward trend continued into May, with supply levels falling -2.2%, marking the largest drop since last June. Again, highlighting current nuance, whilst supply in some segments remains strong, particularly at opposing ends of the market, overall levels are being hampered by the squeeze on the middle of the market. Indeed, stock for cars less than a year old rose 39% YoY, and nearly 12% for those aged over 10 years old. However, as the circa 3 million ‘missed’ sales during the pandemic continues to flow through the market, supply of 1-5-year-old stock fell -17.3% YoY.
This softening in supply, coupled with rising levels of consumer demand, is creating very favourable market dynamics, which is ultimately what’s helping retail prices return to seasonal norms. Auto Trader’s Market Health metric, which assesses potential market profitability, rose to 11% in May, up from the 10% recorded in April. It marks the highest rate of growth since July 2023. For stock aged 1-5-years-old, it’s rocketed 36% YoY.
Despite these favourable market conditions, however, many retailers are choosing to price very high-demand stock below their market value. Collectively, 9,000 retailers are currently advertising around 70,000 cars with a high Retail Rating score below their market average. This behaviour is eroding retailers’ margins, potentially costing around £35 million, or circa £4,000 per retailer.
We’ve seen a very robust used car market so far in Q2; retail prices are stabilising, demand is healthy, cars are selling quickly, and critically, transactions are above where they were last year. Any slight month-on-month softening in prices is entirely seasonal. The market is being boosted by economic green shoots, with consumer confidence rising in the wake of falling inflation and anticipation of further tax cuts on household budgets. There may be some disruption in July with the Euros and General Election, but the impact on car buying will be temporary, and our outlook for the year ahead remains positive.
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), added: “The used car market is displaying remarkable resilience, with May seeing a notable uptick in demand and sales. It’s reassuring to see cars are selling quickly, whilst retail prices remain stable. These indicators collectively highlight a robust market, providing optimism for the months ahead as we enter the second half of the year."
Top 10 used car price growth (all fuel types) | May 2024 vs May 2023 like-for-like
|
Ranks |
Make |
Model |
May 24 Average Asking Price |
Price Change (YoY) |
Price Change |
|
|
1 |
Toyota |
Land Cruiser |
£30,951 |
6.2% |
2.5% |
|
|
2 |
Volkswagen |
Beetle |
£7,451 |
1.7% |
-1.3% |
|
|
3 |
Porsche |
Cayman |
£30,019 |
1.3% |
1.0% |
|
|
4 |
BMW |
M5 |
£43,441 |
0.6% |
0.1% |
|
|
5 |
Audi |
R8 |
£73,394 |
0.1% |
-0.7% |
|
|
6 |
Porsche |
Boxster |
£20,173 |
0.0% |
-0.4% |
|
|
7 |
Suzuki |
Jimny |
£11,808 |
-0.3% |
-0.6% |
|
|
8 |
Mercedes-Benz |
SL Class |
£28,527 |
-0.5% |
-1.5% |
|
|
9 |
Bentley |
Continental |
£57,788 |
-0.6% |
-0.1% |
|
|
10 |
Volkswagen |
up! |
£8,237 |
-1.2% |
-0.8% |
|
Top 10 used car price contraction (all fuel types) | May 2024 vs May 2023 like-for-like
|
Rank |
Make |
Model |
May 24 Average Asking Price |
Price Change |
Price Change (MoM) |
||
|
10 |
Toyota |
Prius+ |
£18,123 |
-21.1% |
0.0% |
||
|
9 |
Land Rover |
Range Rover Evoque |
£20,819 |
-21.2% |
-1.6% |
||
|
8 |
Vauxhall |
Zafira Tourer |
£7,276 |
-21.4% |
-4.1% |
||
|
7 |
DS AUTOMOBILES |
DS 3 |
£7,342 |
-21.8% |
-3.5% |
||
|
6 |
Mercedes-Benz |
EQA |
£30,504 |
-22.0% |
-2.1% |
||
|
5 |
Mazda |
MX-30 |
£18,332 |
-22.1% |
-3.2% |
||
|
4 |
DS AUTOMOBILES |
DS 3 CROSSBACK |
£14,140 |
-22.8% |
-0.4% |
||
|
3 |
Vauxhall |
Corsa-e |
£15,236 |
-23.0% |
-1.8% |
||
|
2 |
Nissan |
Leaf |
£12,739 |
-23.1% |
-5.6% |
||
|
1 |
Volkswagen |
e-Golf |
£11,649 |
-23.9% |
-2.7% |
||
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 monitors circa 800,000 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’s largest automotive platform. It listed on the London Stock Exchange in March 2015 and is a member of the FTSE 100 Index.
Auto Trader’s purpose is Driving Change Together. Responsibly. Auto Trader is committed to creating a diverse and inclusive culture, it aims to build stronger partnerships with its customers and use its voice and influence to drive more environmentally friendly vehicle choices.
With the largest number of car buyers and the largest choice of trusted stock, Auto Trader’s marketplace sits at the heart of the UK car buying process. That marketplace is built on an industry-leading technology and data platform, which is increasingly used across the automotive industry. Auto Trader is continuing to bring more of the car buying journey online, creating an improved buying experience, whilst enabling all its retailer partners to sell vehicles online.
Auto Trader publishes a monthly used car Retail Price Index which is based on pricing analysis of circa 800,000 unique vehicles. The same data that powers the Index is used by the Office for National Statistics to make the UK’s official measures of inflation more robust, as well as the Bank of England to feed the broader UK economic indicators.
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