The latest on used car prices

The latest market data shows that consumer demand, speed of sale, and transactions were all stable in May, whilst average retail prices followed seasonal trends. According to our Retail Price Index the average price of a used car was £16,825, which marked the second consecutive month prices were flat on a year-on-year (YoY) and like-for-like basis, following more than a year and half of price contractions. 

Based on 800,000 daily pricing observations across the whole retail market, the Index also revealed that retail prices had softened -0.7% month-on-month (MoM), a movement which is very much in line with seasonal norms. Apart from the pandemic influenced 2020 and 2021, retail prices have dipped every May following an April increase since we first began tracking retail prices in 2011.  

These pricing trends are indicative of a buoyant used retail market as well as an increasingly nuanced one. This is evident in the levels of consumer demand on Auto Trader, which based on the volume of searches and advert views, grew 1% YoY last month. Although it’s a relatively small increase, it is on top of May 24’s very strong 10% rise and is up from the -2% fall in April when many consumers were more preoccupied with their later than usual Easter holidays and unseasonably good weather.   

A look under the bonnet reveals the more valuable and actionable insights within the sub segments of the market. For example, within the 5-10 and over 10-year-old vehicle cohorts, consumer demand was up a far more robust 4.5% and 10.4% respectively. As a result, these age groups are recording price increases well ahead of the wider market with the average price of a 5-10-year-old car rising 1.4% YoY (£13,705), and those aged over a decade 2.6% YoY (£6,555). Illustrating the nuance in the market, however, demand for 1-3- and 3–5-year-old cars fell -2.4% and -9.1% respectively.   

Due to ongoing sourcing challenges and robust underlying consumer demand, used cars continue to sell at an impressive pace. It took an average of 30 days for a car to sell last month, the same as May last year, but a day faster than in 2023. 5–10-year-old cars sold in just 28 days, faster than any other age cohort. Those aged 1-3 years old lingered on forecourts for 34 days. 

Demand translating into retail sales 

Our sales data shows that transactions rose around 1% YoY last month, following a very strong first quarter and a solid April. However, the data indicates differences in stock profiles is leading to variations in sales across retail types. Indeed, independent retailers are benefitting from stocking more affordable and in demand older cars, with sales increasing circa 4.2% YoY. Conversely, franchise businesses are being impacted by more expensive profiles (volumes of 1-3-year-old cars are returning, whilst there is less available stock of their core profile of 3-5yr old cars), as well as downward pressure from brand-new models. As a result, sales softened circa -1.8% YoY.  

Used EV demand continues steep upward trajectory, as prices drop below ICE 

Nuanced market dynamics can also be seen at a fuel type level. On Auto Trader last month, demand for used petrol and diesel cars fell -0.5% YoY and -9.7% respectively. In contrast, demand for alternatively fuelled vehicles continued to rocket, with hybrids and plug-in hybrids increasing 16% and 27% respectively.  

The biggest growth in consumer interest, however, continues to be seen in used electric cars, which in May increased 31% YoY fuelled by the ongoing softening in prices. The average cost of a used EV (£24,370) fell -7.4% YoY, whilst petrol and diesel car prices grew 0.5% YoY and 2%. This disparity is even more pronounced with 3-5-year-old cars, with electric models at this age dropping -11.6%, versus a 3.1% and 2.4% growth for used petrol and diesel cars. As a result, a 3-5-year-old electric car is currently cheaper (£18,266), than a petrol of the same age (£18,731).