The latest on used car prices
According to the latest data from our Retail Price Index, which is based on circa 900,000 daily pricing observations across the whole retail market, growth in second-hand car prices accelerated in April due, in part, to the ongoing strengthening in consumer demand. The average price of a used car was £17,843 in April, which on a month-on-month (MoM) and like-for-like basis is a 1.5% rise on March’s levels and marks the largest monthly increase since November 2021 [1].
Whilst used car prices have grown on a year-on-year (YoY) basis for 37 consecutive months, the rate of growth has gradually softened since April 2022, when it had reached its peak of 32.2% YoY. March saw a reversal of this trend, however, rising from the 1.3% YoY recorded in February, to 2%. This upward trajectory continued into April, with average prices rising 2.7% YoY.
This acceleration in price growth is the result of the ongoing challenges in used car supply (down -8.9% YoY in April) following the huge shortfall in new car production during the pandemic, and the recent strengthening in demand (up 8.3% YoY). This imbalance is not only keeping second-hand car prices stable, but also supporting a healthy and profitable used car market. Our Market Health [2] metric was up 19% YoY last month.
The growth in demand is reflected in the exceptionally strong levels of consumer engagement recorded on Auto Trader. In April there were nearly 78 million cross platform visits to its marketplace, which represents a significant 16% increase on the same period last year.
The speed in which cars are selling is another key indicator of market health. Last month, used cars took an average of 27 days to leave retailers’ forecourts, which although is one day slower than in March (26), it’s two days faster than in April 2022 (29), and three days faster than in April 2021 (30).
Overall growth held back by falling electric prices
Despite the strong acceleration in YoY and MoM prices, overall growth is being held back by the ongoing contraction in used electric vehicle (EV) values (£31,517), which as of last month were down -18.1% on the prior year. In contrast, the average price of a used petrol (£16,265) and diesel (£16,630) car grew 4.8% and 3.3% respectively.
April marks the fourth consecutive month used EV values have fallen as the still-maturing electric market corrects itself in the wake of a huge influx of stock. Indeed, our data, which is based on the broadest single view of EVs in the market, shows that used electric supply was up a whopping 246% in April. Conversely, the combined supply of petrol and diesel cars fell 16.3% over the same period.
Importantly, consumer appetite for used electric vehicles remains robust, with levels of demand on our marketplace increasing by 33% in April, rising from the 23% recorded in March. Therefore, whilst demand is growing, it’s being massively outstripped by the rate of supply growth, and as a result, causing an expected, but significant price adjustment.
Sources
[1] MoM in November 2011 was up 2.7%.
[2] The Market Health metric shows the ratio of supply vs demand compared to the previous year.