11:08 am, March 5, 2025
Used car prices rose for the first time since October last month, thanks to an ‘ongoing squeeze’ on demand.
That is according to new data from Auto Trader, which has been analysing pricing trends on its platform throughout February.
Experts found that the average used car’s retail price rose 0.5% on a month-on-month basis in February, leaving the figure at £16,671.
The result is the first positive shift in pricing since last autumn, with analysts putting the switch down to strong levels of demand, compared to restricted supply.
Data shows that used car supply fell by 2% compared to last February, despite Auto Trader’s Retail Sales figures data indicating a 3% rise in demand.
Experts say that increased demand is helping to fuel ‘robust underlying health’ with consumer engagement on Auto Trader up 2.8% on the same point last year.
The trend is also seen in days-to-sell statistics, with used cars flying off the forecourts in an average of 28 days last month – the fastest pace since last September.
Dealers have also been boosted by rising consumer confidence as a result of improving economic trends, following the Bank of England’s third interest rate cut since August last month.
Auto Trader’s own research shows that 92% of consumers are at least as confident as they were last year in their ability to afford their next car, up from 90% in February 2024.
Meanwhile 75% of those on Auto Trader are still intending to purchase a car in the next six months.
As a result of the changing marker conditions, the data also showed that fewer vehicles entered the retail market below 100% of their value in February.
However, analysis still shows around 8,500 retailers are advertising around 56,000 high demand used cars below their market value, resulting in over £21m of potential margin being missed.
Reacting to the findings, Richard Walker, Auto Trader’s data & insights director, said: ‘Despite some initial turbulence, we’re seeing the market build some good momentum; retail prices are growing, demand is healthy, cars are selling quickly, and critically, transactions are above where they were last year.
‘It’s especially encouraging to see more retailers respond to tightening margins by pricing their used car stock more confidently, using the insights available to unlock more from the metal.
‘Whilst our outlook for the rest of the year is robust, retailers continue to face a nuanced and complex market which will move at pace.
‘Combining the best of data and technology with your salespeople, will be key in the months to come to adapt to these changes and to drive performance.’
Used EV demand rockets as prices soften
Car Dealer reported this morning that demand for new EVs rose in February, with the powertrain making up a quarter of all registrations.
Now, Auto Trader has revealed a similar picture of improvement in the used retail market as well, with demand for used electric vehicles up a significant 24% on the same point last year.
However, demand continues to be vastly outpaced by supply, which increased at almost double the rate (44%), resulting in bargain basement prices for consumers.
Overall, the average price of a used EV fell 1.5% to £25,395 last month, the data showed.
By contrast, the average price tag for both a used petrol (£14,685) and diesel (£13,925) car rose 0.8% in February.
