7:15 am, September 28, 2022
Demand for used cars is still strong despite cost-of-living concerns – and is set to continue.
That’s the view of Auto Trader, whose chief commercial officer Catherine Faiers told Car Dealer that the used car market is currently ‘robust’.
Speaking to us in an exclusive video interview, which you can watch at the top of this story, she said: ‘When we look at the data, it isn’t as bad as some of the headlines suggest – particularly the headlines on the macroeconomic environment and cost-of-living pressures.
‘The market has definitely softened, particularly from the levels we were seeing last year.
‘But, overall, it actually remains a pretty robust used car market. We’re still seeing engagement levels well ahead of 2019 volumes, and we’re still seeing 64m visits a month – all-time retailer highs – on our marketplace.’
The Auto Trader director explained that while the headlines say used car transactions are down, on a gradual level in certain segments they are up – a sign that the automotive segment is ‘insulated’ from recent macroeconomic events.
‘In Q2, transactions for cars five years and older were up, and up quite strongly,’ she said.
‘So when the supply of vehicles is there and available in the market, the demand is pretty strong. It’s the sub-five-year category where we’ve seen multiple years of weak new car transactions beginning to play through to that supply volume.
‘Overall, the headlines hide a bit of the underlying story and what’s actually going on is that the automotive market is insulated to some extent from some of the bigger, very significant macroeconomic shifts that we’ve seen.’
In the interview, Faiers explains that Auto Trader hasn’t yet seen the effects of the cost-of-living crisis play out in the used car market – consumers still want to buy used cars.
‘We’re not seeing it either in our consumer research – when we’re asking about consumers’ sentiment towards ownership, are you looking at different price bands, have you changed your purchasing behaviour as a result of the cost-of-living crisis? – or in the distribution of consumers engaging with different vehicles in different price bands on Auto Trader.’
Faiers said that at the moment they were putting that down to a combination of factors.
‘About two-thirds of consumers are coming to market with a part-exchange. This means that the price of that car should have experienced the same type of inflation that used cars have also seen, so that helps insulate them a bit from the affordability impact.
‘We’re also still seeing that consumers who are in-market to buy a car are typically more likely to be from slightly higher-income demographics. And those income-different demographics have, again, so far been insulated from some of the more extreme impacts of energy price inflation.’
Faiers added: ‘When it comes to finance, we’ve actually seen some of the finance companies in automotive, again, insulating consumers a bit from some of the base rate increases we’ve seen in the last few months.
‘And because residual values have stayed pretty robust, the increase in monthly finance payments is actually much lower than the increase we’ve seen in the headline used car value.’
She added: ‘So, there are a number of factors at the moment for consumers that mean that some of the more extreme impacts of those pricing movements haven’t played through in a material way.
‘Now, clearly, we’re tracking the data and we’re tracking those engagement surveys very, very closely.
‘We will continue to share and see how the market evolves in that regard in the coming months.’
Elsewhere in the interview, Faiers discusses:
- Are recent macroeconomic factors having an effect on the used electric car market?
- What dealers are most concerned about at the moment
- Predictions for the rest of 2022 and for early 2023
You can watch the full interview by clicking the video at the top of this story
