10:28 am, July 5, 2023
Used car prices are rising at their fastest rate since the back end of last year, new data from Auto Trader has revealed.
The firm’s latest Retail Price Index has found that the average retail value of a second-hand car reached £17,756 in June – the 39th month of growth in a row.
The figure represents year-on-year growth of 3.2 per cent, which is the highest level in eight months.
The sixth month of the year was slightly down on May, with Auto Trader recording a 0.3 per cent month-on-month slide, but experts have put the fall down to seasonal norms and say there is no need for dealers to be alarmed.
The data also found that since used car values began rising, in April 2020, the average cost of buying a second-hand vehicle has risen by £3,900.
Analysts say the strength and stability in second-hand retail values is continuing to be driven by an ‘imbalance in market dynamics’.
They found that used car supply, which has been affected since the start of the pandemic and the subsequent shortfall in new car production, was down 4.1 per cent year-on-year in June, whilst consumer demand was up 2.3 per cent.
This contributed to Auto Trader’s Market Health metric recording a 6.7 per cent rise last month, when compared to the same point in 2022.
Reacting to the findings, Richard Walker, Auto Trader’s director of data and insight, Richard Walker, said: ‘The used car market has enjoyed a strong first half of the year, with the rise in retail values doing little to dampen consumer demand, which has been reflected in the very strong levels of engagement we’ve seen on our marketplace over recent months.
‘Although the current health of the economy does add a degree of uncertainty for the months ahead, based on what we’re currently tracking across the market, our outlook for the rest of 2023 remains an optimistic one.’
EV prices continue to tumble as price parity edges closer
One of the biggest topics on dealers’ minds throughout 2023 has been the rapidly falling value of used EVs.
Earlier this year, we reported that supermarket group Car Planet is no longer buying used electric cars due to them being deemed ‘high risk’.
That followed similar sentiments being expressed by a panel of independent dealers at our Car Dealer Live conference in Gaydon in March.
However the likes of Robin Luscombe and EV Experts founder Martin Miller have both encouraged dealers to buy EVs, when speaking to Car Dealer in recent months.
You can read Miller’s guide to selling an EV here.
Auto Trader’s data found that the average retail retail value of EVs fell to £31,430 in June – a year-on-year slide of 19.1 per cent.
It marks the sixth consecutive month of decline, with average EV prices falling by around £5,000 since January and nearly £9,500 since their peak in July 2022, when the average stood at £40,728.
Experts say the decline has come due to the market ‘still maturing’ and ‘entering a new phase’.
Whilst consumer demand for second-hand EVs was up six per cent in June, it was been unable to keep pace with the sharp increase in availability, with supply growth up 174 per cent last month.
Despite the concerns, Auto Trader says there are strong signs of used EV values beginning to stabilise, with June also seeing the lowest level of month-on-month price contraction (-0.9 per cent) since August last year.
It also means that that the upfront price gap between many electric models and their ICE counterpart is beginning to close rapidly.
Following the price realignments made by Tesla, the average price of a used 3-year-old Model 3 (£30,700) is now only £3,200 more expensive than a BMW 3 Series of the same age – down from £3,600 in April, and a whopping £22,000 in August.
In some cases, EVs are now even cheaper than their traditional counterparts. Last month a three-year-old Jaguar I-PACE was around £2,000 cheaper than a petrol or diesel.
When it came to days to sell, EVs are taking longer to sell than any other fuel-type at 38 days in June. Both petrol and diesel cars remained at 27 days.
Walker added: ‘Although EV values are still contracting, it’s important to put it into the right context.
‘The electric market is still an immature one, and what we’re seeing is a natural and expected correction in the wake of a massive influx of stock over recent months.
‘It may be some time before the market reaches a complete equilibrium, but we are seeing clear signs of prices stabilising and some very attractive savings for car buyers.
‘It means that for retailers who are able to follow the data, and source the right electric stock for their forecourt, there’s some very strong profit potential out there.’
