Auto Trader is calling on dealers to ‘hold firm’ on prices and remain optimistic as it reveals average used car prices rose by just over eight per cent in December 2020.
The firm’s Retail Price Index – which is based on around 900,000 vehicles – shows the average price of a used car in December was £14,085 – a year-on-year and like-for-like increase of 8.1 per cent.
December was the ninth consecutive month of growth and put a lid on a strong year overall which saw prices rise by four per cent year-on-year – a sharp contrast the 0.5 per cent annual growth recorded in 2019.
Supply constraints and strong consumer demand were the reasons for the price rises, said the firm, in a year that saw over 673m visits to its marketplace – an 11 per cent increase on 2019, and in December alone, visits increased 20 per cent year-on-year.
Auto Trader also said that while traffic to its platform slowed down in the run up to Christmas, visits and advert views it grew 30 per cent and 33 per cent respectively between December 27 and January 3.
Retailers holding firm
Auto Trader said the number of dealers making price changes and the value of those price adjustments made in December remain lower than pre-Covid levels.
Just over 1,900 dealers made price changes in December – 4.2 per cent fewer than in December 2019, while the average daily reduction was £262, or 7.6 per cent less.
The firm said the average number of cars being changed each day was 13,082 – fewer than the 17,500 to 24,000 typically adjusted during normal trading conditions.
Electric prices surge – ICE demand cools
Demand for petrol increased 0.6 per cent year-on-year in December, while the levels of supply grew 3.5 per cent, with the average price sitting at £12,751, Auto Trader said.
Used diesel prices also eased, slowing from a record 9.2 per cent in November to nine per cent last month, with an average price of £14,741. Demand for diesel however fell, down 7.7 per cent year-on-year, while levels of supply fell even further, dropping 13 per cent.
In contrast, electric vehicles continued to record exceptionally strong levels of demand.
Premium EVs saw demand increase 80.8 per cent year-on-year in December.
However, with a much stronger level of supply in the market, which was up 223.9 per cent, prices contracted slightly, decreasing 1.7 per cent year-on-year (£46,432).
We strongly urge retailers to trust the data and continue to hold firm with their prices
While demand for volume EVs was slightly lower, up 58.7 per cent year-on-year, the gap between levels of supply was far smaller, at 86.9 per cent, helping to drive average prices up 16.2 per cent (£19,197).
Auto Trader’s director of data and insight, Richard Walker, said: ‘Encouragingly, we can see that the tighter restrictions rolled out across the UK throughout December had little impact on the levels of consumer demand.
‘Whilst sales capabilities were limited to click & collect and home delivery, we saw millions of consumers visiting our marketplace and engaging with our retailer partners, which suggests there was a healthy market available.
‘Early signs suggest that January consumer demand will remain robust, despite the recent increase in restrictions.’
He added: ‘Consumer demand, along with constrained supply, is sustaining price growth, so, far from requiring a big correction in pricing, with such strong engagement we have every reason for optimism that prices will remain strong in Q1.
‘As with the previous lockdowns, we strongly urge retailers to trust the data and continue to hold firm with their prices, which as we saw throughout 2020 helped ensure retailers achieved much stronger margins than if prices were adjusted unnecessarily.’
Auto Trader director Catherine Faiers recently spoke to Car Dealer Live and the Car Dealer Podcast about the latest restrictions and promises there are buyers out there. Click the video at the top of this story to see what she says or click here to listen to our podcast
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