10:47 am, July 21, 2023
The rise in used car retail prices has eased so far in July from an increase of 3.2 per cent year on year in June to 2.8 per cent in July.
That made the current average price of a used car £17,975, according to Auto Trader”s Retail Price Index up until July 20 – up 0.3 per cent month on month on average.
The headline figure masks strong rates of growth across fuel types and age cohorts though – especially among older cars, which are rocketing thanks to strong market health dynamics.
The current average retail value on Auto Trader of a second-hand car more than 15 years old is £5,805 – 8.7 per cent up on July 2022 and 2.6 per cent up on last month.
Meanwhile, the average price of 10-to-15-year-old cars (£6,634) was up 1.4 per cent month on month but 11.1 per cent up year on year – on top of the year-on-year 26.5 per cent growth recorded in July 2022.
Auto Trader said the rapid increase was partly being fuelled by supply pressures dominating robust consumer appetite, with current levels of demand – up 19 per cent year on year – outpacing the availability of stock, which is up seven per cent year on year.
The supply constraints of older age bands today is the result of the 2008 financial crisis, added Auto Trader, where volumes of brand-new cars were slower to flow through into the retail market.
The only age band to see a price contraction in value this month were vehicles aged one to three years, with the average retail price of £27,003 down two per cent on last year.
Auto Trader said this softening was being driven by the ongoing drop in the value of low-emission vehicles, which are dragging back the average values for this age group of cars.
And while the retail value of petrol and diesel cars aged one to three years have both risen by three per cent year on year, their plug-in-hybrid and electric counterparts have sunk by 15 per cent and 24 per cent respectively.
Auto Trader said the disparity between traditionally and alternatively fuelled cars was consistent with the wider retail market.
With the rate of supply growth – up 174 per cent year on year – continuing to outpace the levels of growth in consumer demand, which have risen by six per cent year on year, EV retail prices across all ages are still contracting on a year-on-year basis.
The current values of electric vehicles – £31,622 – are down by 20.7 per cent on last year.
In contrast, the average retail price of a used petrol (£16,519) and diesel (£16,570) car of any age group is up 5.2 per cent and 5.1 per cent year on year respectively.
July recorded the lowest level of month-on-month contraction since August 2022.
At 0.1 per cent this month to date, Auto Trader said it was a marked improvement on the 0.9 per cent month on month recorded in June, 1.5 per cent in May, and 1.6 per cent in April.
This has been helped by slowing levels of supply into the market, as retailers sell through available cars.
Because of improving supply and demand dynamics, as well as finding a price point attractive to sufficient numbers of car buyers to meet the increased levels of supply, EVs are now leaving forecourts much faster, said Auto Trader.
The current speed of sale of EVs is on a par with petrol cars at just 30 days, making them the joint-fastest selling fuel type and the fastest speed of sale for electric vehicles in nine months.
Richard Walker, pictured, Auto Trader’s director of data and insight, said: ‘Average retail prices have been increasing for 40 consecutive months, but since the start of the year we’ve seen a steady acceleration in retail price growth.
‘Although this has slowed slightly, it’s not an indication of a market in reverse, and anyone anticipating a drop in retail prices anytime soon will be sorely disappointed.
‘Despite the economic headwinds, demand remains buoyant, which combined with the ongoing constraints on new and second-hand car supply, will keep retail values stable.
‘Increasing used car prices does have the potential to place added pressure on motorists who are already feeling the squeeze on their household finances.
‘However, most car buyers should be insulated if they have a car to sell or to exchange, as it’s not just the price of the car on retailers’ forecourts that are rising – so too is the car on driveways, and in many instances is likely to be worth considerably more than expected.’
