December marked the 21st consecutive month of growth in used car prices as 2021 ended on a high, new data from Auto Trader has revealed.
The online firm’s latest Retail Price Index showed used car prices surged by 30.5 per cent year-on-year last month.
The index, based on daily pricing analysis of 900,000 vehicles, recorded that the average price of a used car reached £17,816.
Auto Trader says the record price growth has been driven by unique market dynamics, in particular the very high levels of consumer demand.
Throughout last year, the marketplace saw cross-platform visits increase 27 per cent compared to 2019 with the average number of hours surging by 20 per cent when compared to pre-pandemic levels.
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There was also a significant increase in the number of used and new car enquiries made to retailers through Auto Trader, which last year grew by eight per cent and 71 per cent respectively when compared to the prior year.
Heightened demand is also contributing to an increase in the speed in which cars are selling.
Last month, the average used car sold 28 per cent faster than in December 2020 (32 days vs. 41 days).
One in four ‘nearly new’ cars priced above brand new equivalents
In addition to the massive demand in the market, price growth has also been affected by ongoing issues in new and used car supply, such as the global semiconductor shortage.
In December the average asking price of a ‘nearly new’ vehicle (those aged less than 12 months old) increased by a colossal 45 per cent when compared with two years prior in December 2019, reaching an average price of £34,429.
The huge price growth means that almost a quarter of ‘nearly new’ cars are currently priced above their brand-new equivalents, whilst one in two are priced within five per cent of the brand-new list price.
Richard Walker, Auto Trader’s director of data and insights, said: ‘2021 was a remarkable year for the automotive industry.
‘Used vehicle pricing saw double-digit growth and used cars flew off the forecourts in record time.
‘Despite ongoing restrictions, our sector has remained resilient in the face of significant challenges and is on track for strong continued price growth well into the second half of the new year.
‘The two main factors fuelling this growth, supply constraints and strong consumer demand, both show no signs of easing anytime soon.
‘Claims of an imminent ‘bubble burst’ are failing to take these key dynamics into account.’