Continued price growth and exceptional demand means retailers can afford to hold firm

Richard Walker, Data & Insight Director, Auto Trader 

Despite some commentary indicating used car prices were in decline, our data highlights just how strong the used car market remains, with the average price of a used car on our marketplace up a whopping 28.9% (£20,294) like-for-like on the same period last year. It marks the 93rd consecutive week of price growth. Highlighting the huge acceleration in used car prices, the average price of a used car on Auto Trader has increased over £4,200 in just six months; up from £16,096 in mid-August, at which point the rate of growth was almost half of what it is today (15% vs 28.9%).  

This acceleration is continuing to be fuelled by the ongoing constraints in new and used car supply and the record levels of demand in the market. This is reflected in the huge number of used car enquiries being sent to retailers through our platform, which last week was up nearly a quarter (23%) on the same period last year. 

Further evidence of a strong market is the pace at which cars are leaving forecourts, with the average last week being just 26 days. Although it’s a very slight slow-down on the average 25 days recorded in pre-COVID February 2020, it’s 30% faster than the speed of sale recorded in 2021 (37).  

Consumer sentiment survey points to sustained demand 

Despite the current inflation rates, the latest findings from our consumer sentiment survey, conducted in January, show a minimal impact on buying intentions.  Out of circa 4,100 car buyers, 37% intend to purchase within the next two weeks, which is up from 35% in December, whilst 26% intend to purchase within the next three months. 32% of those surveyed believe car ownership is more important today than it was pre-COVID, which is a marked increase on the 25% recorded in February 2021, when the country was still under strict restrictions. What’s more, 51% feel more confident in their ability to afford their next car than they did a year ago, which marks the highest figure since June 2021. 

Although inflation will always pose a potential headwind for demand, based on the positive consumer metrics we’re tracking across the retail market, as well as broader economic factors such as the falling unemployment rate and record number of job vacancies, we don’t anticipate any significant easing any time soon. With such strong levels of demand, and no end in sight for the current supply challenges, we can expect very healthy year-on-year price growth to continue well into the middle of the year offering very healthy margin opportunities.  

Most importantly, this huge demand means you can afford to continue to hold firm in your pricing and not feel compelled to lower prices to entice consumers on to your forecourt. Be confident in your pricing and be sure to use accurate and up to the minute data, tools and insight to back up your pricing decision.