Press release

Exceptional consumer demand fuels upward trajectory of used retail prices into October

Based on the circa 451,000 vehicles currently advertised on the Auto Trader marketplace, exceptionally strong growth in average used car prices has continued into October. On a like-for-like basis, last week (5th – 11th October) prices increased 8.5% on the same period last year, marking 23 weeks of consecutive price growth.

As highlighted in September’s data, this steep trajectory is being driven largely by the imbalance of supply and demand in the market. Last week Auto Trader recorded 14.3 million visits to its marketplace, a 21.9% increase on the same period last year. And whilst some of the supply constraints that have been challenging the market are beginning to ease, it hasn’t been enough to balance out the scale or slow the dramatic rate of price growth.

To understand how these dynamics affect price movements, Auto Trader monitors both demand and supply to give a ‘market health’ calculation. Last week, demand increased 8.8% year-on-year (YoY), whilst supply was down -5.7% YoY, leading to a 15.3% increase in market health and a buoyant, profitable market for used cars.

Fuel types

The impact of supply and demand can also be seen at a granular level. Last week, demand for petrol increased 12.0% YoY, whilst supply fell -1.7%. Similarly, diesel demand recorded an increase of 2.2% YoY, but supply dropped a significant -14.7%. As a result, petrol and diesel vehicles recorded a like-for-like price increase of 8.9% and 9.4% YoY respectively.

Age brackets

Looking at the average weekly prices within age brackets, those used cars aged 10-15 years continue to be affected by a sharp decline in levels of supply, which last week was down -13.5% YoY. As a result, prices increased 13.0% YoY on the same period last year and marked the highest rate of growth so far this month.  The low supply of 10-15-year-old cars in the market was only exceeded by nearly new cars: those aged up to 12 months recorded a fall in supply of -48.3% YoY, whilst demand dropped -20.5% YoY. However, prices still increased, albeit a modest 6.0%, the lowest of any age group.   

Body types

Last week, like-for-like prices continued to increase across all body types, with hatchbacks and MPVs recording the highest rate of growth, up 12.0% and 9.2% YoY respectively. However, SUVs remain the most in demand, increasing 16.3%, helping to grow prices 6.6%.  

Premium versus volume

In September both premium and volume brands recorded a strong price growth as a result of demand outstripping supply in the market. The latest snapshot of cars available on Auto Trader reveals this performance has continued into October, with the average price of used premium and volume cars increasing 7.7% and 11.4% YoY respectively.

Commenting, Auto Trader’s director of data and insight, Richard Walker, said: “Halfway into October and it’s already clear that the market is continuing to defy the naysayers that predicted a price crash in September. We’re maintaining exceptional levels of traffic on our marketplace, and despite the introduction of new tiered restrictions across the country, based on previous analysis done on areas where restrictions have already been tightened, such as Leicester, we’re confident it will have marginal impact on demand at this stage.

 “In fact, our research points to new opportunities; last week we saw an increase in people considering owning a car to be more important than it was before COVID-19[1], and the aversion to public transport[2] is now at its highest rate since we began tracking it in the summer. With supply constraints an ongoing issue for many retailers, we don’t foresee any imminent factors that will affect price growth beyond the typical seasonal trends.”

 Retailer pricing behaviour

Whilst the number of retailers making price changes and the value of their price adjustments has begun to increase since the end of the lockdown restrictions, they remain either lower than normal traditional conditions, or at the lower end of typical pricing behaviour.

Last week, the average number of retailers making daily price adjustments was 2,351, which is getting closer to the lower end of typical pre-lockdown behaviour (2,500 – 3,000). In total, 14,057 vehicles were repriced during the week, which is the highest number recorded since coming out of lockdown but remains lower than normal, which typically fluctuates between 17,500 and 24,000 vehicles.

In terms of the actual price reductions being made, pre-COVID-19 retailers typically lower sticker prices between £250-£550 per day. Last week the average price reduction was £279 which remains at the lower end, and just £6 less than the end of September.

[1] Auto Trader on site survey conducted 5th October 2020

[2] Auto Trader on site survey conducted 5th October 2020

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