Customer demand and sales of used cars are staying ‘robust’ as retail prices fall, says Auto Trader.
The online marketplace said its data showed that prices fell by 1% on average up to November 15 versus October, with the current average price of a used car standing at £17,492.
That largely follows pre-pandemic trends, it said, adding that all segments had enjoyed growth on last year’s levels.
The news came in the wake of our report on Monday in which Cox Automotive’s Phil Nothard said a fall in used car trade prices had taken the industry by surprise.
Auto Trader said that based on 800,000 daily pricing observations, its data also showed strong price rises ‘in a significant proportion of the used retail market’.
Cars older than five years increased by 2.2% year on year at the November mid-month point, while those that were more than 10 years old were ‘up a very robust 8.4%’.
However, the average price of cars aged below five years were down 4.5% year on year, partly because of an increased supply of younger vehicles over recent months, as well as more pressure from new car deals.
As a result, the overall year-on-year total market figure was down 2.3% so far this month.
But the used car market is still resilient, said Auto Trader, with current consumer demand increasing year on year in all segments, including different fuel types.
In total, demand is up 6.9% on last November 2022, while supply as determined by stock levels on Auto Trader is up just 3.2%.
As a result, Auto Trader’s Market Health metric – which determines the potential profitability of used cars based on real-time supply and demand dynamics – is up by 3.6% versus last year.
And while petrol and diesel cars recorded relatively conservative year-on-year levels of growth at 2.7% and 0.7% respectively, interest in low-emission cars on Auto Trader has shot up, it said.
By November 15, demand levels for plug-in hybrid and full/mild hybrids were up 37.6% and 51.1% respectively.
Meanwhile, consumer engagement for pure-electric cars on Auto Trader is up 69.1% on November last year, which it said had been driven by both improved affordability and availability.
On average, used cars have been taking 31 days to sell in November – the same speed as the past three years but faster than the 33 days of pre-pandemic November 2019.
Electric cars have been taking the shortest amount of time to sell at 25 days.
Richard Walker, Auto Trader’s director of data and insights, said: ‘Although the younger end of the market is being squeezed by increasing supply levels and renewed pressure from new car offers, it’s promising to see that consumer engagement from our 10 million monthly visitors remains robust across all segments of the market.
‘Used car supply is increasing, but critically it remains behind demand, which makes any sudden or significant drop in retail prices unlikely.
‘With a large proportion of the market still recording strong price growth, car buyers are clearly prepared to pay the retail market value, and so I would urge retailers not to risk profit potential or a self-fulfilling prophecy by making knee-jerk reactions based on trends in trade values.
‘Cars continue to sell, and importantly, quickly. By buying and selling fast, there’s little time for small changes in value to be felt.
‘So, my advice remains unchanged: price to the market to sell quickly, and don’t give up your profits unnecessarily – follow the data.’