According to the latest results from the Auto Trader Retail Price Index, which is based on daily pricing analysis of circa 900,000 vehicles, the average price of a used car in July was £14,781. At a huge 14.1%, it marks the 16th consecutive month of used car price growth on a year-on-year (YoY) and like-for-like basis. Such is the current strength of the used car market the rate of price growth has doubled in just three months, rocketing from a comparatively conservative 7.1% in April.
This steep trajectory has been fuelled by the massive levels of consumer demand in the market, which is reflected in the increased traffic to Auto Trader. In July, there were 67.5 million cross platform visits, representing a 29% increase on the same period in 2019, whilst consumers spent 10.2 million hours researching their next car on the marketplace, which is a 22% increase.
Another testament to the underlying levels of demand in the market is the increased speed in which retailers are selling cars. Last month, it took an average of just 24 days for new stock to leave forecourts, 5 days faster than in July 2019.
8 million used cars expected to sell in 2021 as demand fuels record Q2 sales performance
As a result of the huge demand in the market, according to Auto Trader’s proxy sales data[i], many retailers are reporting record used car sales performance, and based on what it is observing on its marketplace, Auto Trader anticipates Q2 2021 will be the highest quarter ever for used car transactions. With robust demand levels expected to continue, Auto Trader has revised its forecast for the year, predicting a market total of circa 8 million used car sales in 2021.
Commenting on the results, Auto Trader’s director of data and insight, Richard Walker, said: “For the rate of price growth to double in just three months is really quite incredible and is testament to the exceptional levels of consumer demand in the market. Based on what we’re seeing more broadly, such as the strong levels of disposable income and savings, as well as improving consumer confidence and low interest rates, we have every reason to believe that these levels have the potential to remain for much, if not all, of 2021.What’s more, we have barely begun to scratch the surface in reclaiming the 1.4 million ‘lost’ transactions in 2020 as a result of closed physical showrooms. It’s for these reasons we feel very comfortable in revising our forecast for this year at much higher rate than some commentators have suggested, to circa 8 million used transactions.”
Fewer retailers adjusting prices in response to market health
Reflecting the strength of the market, Auto Trader continues to see fewer retailers adjusting prices on fewer vehicles. An average of 2,116 retailers made daily price adjustments in July, which is circa 441 fewer than the same period in 2019. What’s more, an average of 10,577 vehicles were repriced every day last week, which is a massive 35% fewer when compared to 2019. The data also suggests retailers were making significantly smaller reductions to sticker prices, averaging at just -£97, compared to the average reduction of -£339 made in 2019.
Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), said: “Sustained consumer confidence across most vehicle types is greatly encouraging for franchised dealers as it is reflective of an increasingly healthy economy. Whilst we are seeing some headwinds in relation to new and used car supply, as a consequence of semi-conductor shortages and factory closures, NFDA members still remain cautiously optimistic in their outlook for the remainder of the year.”
Ice prices heat up, but premium EVs in need of charge
The massive price growth recorded at a macro level was evident on a more granular basis too. In fact, like-for-like prices for both used petrol and diesel cars recorded record levels in July, increasing 9.6% YoY (£13,409) and 16.2% (£15,052) respectively.
Like-for-like prices for both used volume[ii] and used premium [iii] electric vehicles (EV) recorded price growth last month, but at a more conservative level compared to their ICE counterparts. Volume prices rose slightly from 9.2% YoY in June to 9.6% (£23,303) in July, while premium marques increased from -7% to -6.3% (£45,204). The reason for this disparity is due to supply and demand: YoY demand continues to outstrip levels of supply in the EV volume market (107.2% vs 65% respectively) leading to positive price growth. Conversely, YoY supply continues to outstrip demand in the premium market (184.7% vs 105.4%), which is leading to the negative pricing.
[i] Based on the levels of stock removed from Auto Trader
[ii] Volume EV brands categorised as: Ford, Volkswagen, Vauxhall, Peugeot, Nissan, Citroen, Kia, Hyundai, MG, Renault, SEAT, SKODA, Honda, Toyota, Fiat, Suzuki, Mazda, Mitsubishi, Smart, Dacia, Jeep, Subaru
[iii] Premium EV brands categorised as: Audi, BMW, Mercedes-Benz, Land Rover, Jaguar, Tesla, Volvo, MINI, DS AUTOMOBILES, Lexus, Abarth, Alfa Romeo