Consumer demand for used cars remains as strong as ever and prices aren’t going to dip any time soon.
That’s the expert opinion of the man at the top of automotive advertising marketplace Auto Trader.
In an exclusive video interview with Car Dealer, Auto Trader chief executive Nathan Coe said his data experts believe used car prices will remain high for at least the next six months.
He explained that even if trade values are beginning to plateau – as revealed by Cap HPI in an interview with Car Dealer last week – Auto Trader has not seen any tail off in demand from car buyers.
Coe said: ‘We are still seeing as strong trends as we’ve ever seen.
‘If you look at year-on-year, no matter which metrics we look at, ad views per car are still up as high as they have been.
‘Cars in October were selling 11 per cent quicker than they were two years ago back in a more normal market.
‘That strong demand combined with what we know to be a tighter supply is still translating into very strong retail price growth.’
Auto Trader reports on the market with a different view to trade valuations experts as it sees the industry from a consumer’s perspective.
Coe said new car production and sales will have to pick-up dramatically before it starts to impact the used market but that we’re ‘talking about a good six months’ before any real price falls are seen.
‘Everything we have seen says to us that actually these strong conditions are going to be around for some time to come,’ he added.
The Auto Trader chief executive believes that a lot of this has been driven by consumers not willing to wait for new cars.
Semiconductor shortages have seen manufacturers extend waiting lists on new cars and the fact many consumers simply aren’t prepared to wait is pushing used prices up.
Coe agrees that this ‘Amazon Prime’ mentality among car buyers is driving price growth.
‘I think almost unquestionably,’ he said.
‘The last time I looked we had 1,000 make model derivatives where the used vehicles are selling for more than the new car, which I think pretty much demonstrates it’.
‘We know that some of the biggest reasons people change their cars are a change in life circumstances.
‘At the moment, the obvious choice is to go used and make sure you can get it and that’s playing through to the prices that we’re seeing.’
Coe revealed that as used car prices change so quickly, some dealers are now using automatic price changes to ensure their stock is at the right price.
Just like flights and hotels, where websites adjust pricing in line with demand, Coe explained some of the best car dealers are doing that with used cars.
The Auto Trader boss also explained the benefits of the firm’s Connect product which has been opened up to all dealers.
Hailed as an industry first, Auto Trader Connect lets retailers use all its data capabilities to update multiple back-end and consumer-facing systems with vehicle data in real time.
The stock management system has been in use by 325 dealers for a year, but the first phase of it – Retail Essentials – will be part of all of Auto Trader’s standard packages from 2022, with early access from December 1 this year.
Ahead of Auto Trader’s results next week, Coe was restricted legally by what he could tell us about the firm’s performance, but explained that the business ‘was doing well’.
He said: ‘We’ve come out of the restrictions and our customers are absolutely flying which is good. The industry is in really good health. So from that perspective, it’s good.
‘That being said, these conditions that we’ve got right at the moment, aren’t actually particularly helpful for Auto Trader if you think our business model is basically the more cars that are on Auto Trader, the more the business model generates revenue.
‘So when you get less supply combined with a really quick stock turn actually, that’s pretty much the opposite scenario to what we want.
‘We accept it because it is good for our customers, but actually it makes it less good for our performance and what it would otherwise be.
‘Now thankfully, retailers are in a good place with us, they are taking up products, all retailers have kind of lurched towards digital generally and that brings them towards us.
‘So overall our performance is decent, we’re happy with it, and most importantly, audience is really strong.’