June records largest used car price growth since January 2019
Auto Trader’s Retail Price Index recorded a 3.7% year-on-year increase in June 2020 (on a like-for-like basis) which was the largest monthly growth in used car prices since January 2019. The Index is based on observed pricing data from circa 900,000 vehicles every month, this took the average price of a used car in June to £13,949.
June, the first full month of trading post lockdown for retailers in England, marks the third consecutive month of used car price growth, following the 0.1% and 1.9% recorded in April and May respectively. As well as the low supply of vehicles in the market (due in part to the slow reopening of auction houses post lockdown), this price growth reflects the huge surge in demand from car buyers. The Auto Trader marketplace recorded over 64 million visits last month, an increase of 29% on June 2019.
There were also interesting trends in price driven by the age of the vehicle, with older cars seeing bigger increases. In June, the average retail price of a car aged over 10 years increased 6.7% over the previous year, and those aged five to 10 years increased 7.0% year-on-year. Newer cars aged below five years recorded a more conservative growth of 3% year on year.
Auto Trader’s data scientists have also been tracking the pricing behaviour of retailers. During the lockdown period the number of retailers making price changes and the value of price adjustments was significantly lower than normal trading conditions. Whilst this has increased following the reopening of showrooms last month, the levels are still well below ‘normal’, pointing to the level of retailer confidence in market pricing.
Pre-COVID-19, the number of retailers making daily price changes to their stock averaged between 2,500 and 3,000. Last week a daily average of 1,816 retailers made price changes, which is 33% lower than the same period last year. In normal trading conditions, retailers adjusting their stock average between £250 - £550 per day. Further demonstrating the degree of confidence in the market, the average amount of each reduction last week was £256, so at the lower end of ‘normal’. Among those adjusting prices, 27% are increasing them.
Commenting on these observations, Auto Trader’s director of data and insight, Richard Walker, said:
“At Auto Trader, our valuations are based on observed price data from retailers. We don’t control it or set it, we simply reflect retailer pricing and ultimately, retailer reaction to market supply and demand trends. We’re seeing strong pricing trends at the moment driven by the surge in consumer demand post lock-down and we expect this to continue in the coming months.
“The most successful retailers continue to achieve the best margins by utilising the retail back pricing philosophy. They use what is happening at a retail level to determine what they pay at trade. This approach feels more important than ever at a time when both the B2B and B2C markets will be driven by different factors.”
Petrol prices rocket as low emission counterparts continue decline
The impact of supply and demand dynamics in the market are evident in the price movement of internal combustion engines (ICE) and their low emission counterparts. At £14,789 diesel prices have increased 2.7% year-on-year following on from the 0.9% increase recorded in May. This is the highest level of growth since February 2019. However, it pales in comparison with the rate of growth in used petrol prices, which are up 5.3% year-on-year. At £12,697, it marks seven months of continued price growth and the highest increase recorded since October 2018. This is the result of high demand versus low supply in the market.
The opposite is true for used alternatively fuelled vehicles (AFVs), which has seen a comparatively healthy supply in the market relative to demand. As a result, at £22,234, AFVs have recorded four consecutive months of price decreases, although the rate of contraction has begun to slow: from -1.5% in May to -0.7% in June. The average rate of price contraction for pure electric vehicles (EV) has remained relatively flat however, falling approximately 3% each month since February 2020. The average sicker price of a used EV in June was £25,786.
Mike Jones, Chairman of Automotive profitability specialists ASE plc commented:
“June was undoubtedly a phenomenally strong month for used cars, with many retailers recording record sales during the month. Consumers have emerged from the lockdown with an increased demand for personal mobility and this is reflected in the large monthly price growth reflected in the Auto Trader Retail Price Index, particularly amongst older vehicles.
“As we predicted having watched the trends from other markets around the world as they opened up after the Covid-19 crisis, the fear of infection has driven an increased demand for car ownership as commuters remain fearful of public transport. The age of the cars increasing in prices, alongside the growth in petrol and diesel values, shows that this is a demand driven by a desire for individual transport rather than part of a wider green agenda.”
About the Retail Price Index
The Auto Trader Retail Price Index is published monthly and provides an overview of the latest observed price and search data from our marketplace. It is the only index that is an accurate reflection of the live retail market, as determined by retailers.
We monitor hundreds of thousands of vehicles each day, including 90,000 vehicle updates and an average of 19,000 vehicles added or removed from Auto Trader. This coupled with data from circa 450,000 trade car listings every day, as well as additional retailer forecourts and website data means no other index is powered by more data.
About Auto Trader
Auto Trader Group plc is the UK and Ireland's largest digital automotive marketplace. Auto Trader sits at the heart of the UK's vehicle buying process and its primary activity is to help vehicle retailers compete effectively on the marketplace in order to sell more vehicles, faster. Auto Trader listed on the London Stock Exchange in March 2015 and is now a member of the FTSE 100 Index.
The marketplace brings together the largest and most engaged consumer audience. Auto Trader has over 90% consumer prompted brand awareness and attracts circa 50 million monthly cross platform visits each month, with over 80% of visits coming through mobile devices.
For more information, please visit https://plc.autotrader.co.uk/who-we-are/about-us/
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Andrew Nankervis | Andrew.firstname.lastname@example.org
 21st – 28th June 2020