Press release

Volume brands see record annual price growth as premium price tags flatten out

  • Significant disparity between volume and premium brand price growth; 8% vs 1% in July
  • A positive July for diesel with record price growth and small increase in Auto Trader searches
  • Average price of used cars increases 7% in July

According to the latest figures from the Auto Trader Retail Price Index, there is a sharp disparity in the average price growth between used volume and premium brands, recording a contrasting year-on-year price increase in July of 8% and 1% respectively. This represents the highest rate of price growth for volume brands, and the lowest for premium since January 2017 (0%).

The data reveals that the gap emerged late last year. In August, both volume and premium brands recorded the same levels of sustained price growth (3%), but then began to separate, with volume continuing its trajectory, whilst the rate of growth for second-hand premium cars slowing significantly.

Commenting on the findings, Karolina Edwards-Smajda, Auto Trader’s Director of Commercial Products, said: “At this stage it’s unclear as to exactly why there’s such a contrasting pricing strategy between volume and premium brands, but it’s likely two key factors have coincided. For one, premium brands are competing more aggressively for market share and continue to develop sales at a healthy pace. And secondly, since Brexit and the impact on the value of the pound, we’ve seen volume brands less included to chase the market with lower margins. There’s clearly an emerging trend here and something we’ll keep a close eye on in the months to come.”

Average used vehicle prices increase in July

In terms of the wider market, used vehicle prices saw an increase in July, reaching £12,709; a like-for-like increase of 7% on the same period last year (stripping out the impact of changes in the mix of cars being sold[1]).

The average price of a used petrol car in July was £10, 844, an annual increase of 8%. It marks the fuel type’s lowest level of year-on-year growth since August 2017.

Despite wider challenges in the new car market, diesel recorded a particularly strong performance last month. The average price of a second-hand diesel in July was £14,411, which represented an annual increase of 6%, marking its highest ever rate of growth.

Diesel remains the UK’s most popular fuel type, albeit marginally

On average, 22% of all searches that take place on Auto Trader each month are based on fuel type. In June 2016, diesel accounted for 71% of searches and petrol just 27%. However, this figure has steadily declined in line with negative public commentary and by June 2018 reached a record low of just 47% of searches, whilst petrol had increased to 46%. In July, diesel managed to slow this trend, albeit marginally, creeping back up to 49% of all fuel related searches – it’s first increase since October 2017. However, petrol remains in hot pursuit, accounting for 47% of all fuel related searches last month.

The percentage of searches for alternatively fuelled vehicles (hybrid, bi-fuel, petrol ethanol, LPG, electric) remained flat in July, accounting for 4%.

Karolina continued: With new diesel registrations continuing to tumble, and the ongoing negative tone of the fuel debate, it’s very reassuring to see diesels performing so stoically in July in terms of both value and popularity on Auto Trader. We saw this reflected in the recent Q2 used car transactions which recorded a 3.2% increase in second-hand diesel purchases.

“However, whilst diesel is showing great resilience we cannot ignore the inevitable. AFV adoption remains disappointing but as the barriers to entry reduce and awareness amongst consumers increase, they’ll not only catch up with diesels, but will very quickly overtake them. There are clear signs this is already in effect and represents a very exciting opportunity for retailers. A diverse forecourt that accounts for all consumer tastes, including budget conscious car buyers and the more technologically savvy, will be essential to sustaining growth.”

The Auto Trader Retail Price Index combines and analyses data from c. 500,000 trade used car listings every day, as well as additional dealer forecourt and website data (OEM, fleet and leasing disposal prices, in addition to 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.

[1] Mix is determined by Society of Motor Manufacturers and Traders segment, age of vehicle and fuel type

According to our latest pricing snapshot, the strong growth in used car prices has continued into September. The average cost of a used car grew 7.4% YoY last week, marking 19 weeks of consecutive growth. Read the results in full here: https://t.co/TX88xlBOpU https://t.co/xEszb3JolF
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