June recorded the largest used car price growth since January 2019, new data reveals.
Auto Trader’s Retail Price Index recorded a 3.7 per cent year-on-year increase in June 2020, which was the largest monthly growth in used car prices since January 2019.
Of 900,000 cars indexed, the average used car price in June came to £13,949.
June also marked the third consecutive month of used car price growth, following the 0.1 per cent and 1.9 per cent recorded in April and May respectively.
As well as the low supply of vehicles in the market, this price growth reflects the huge surge in demand from car buyers, says Auto Trader.
The firm’s marketplace recorded more than 64m visits last month – an increase of 29 per cent on June 2019.
Older cars experienced the biggest price increases, with cars aged over 10 years increasing by 6.7 per cent over the previous year, and those aged five to 10 years rising seven per cent year-on-year.
Newer cars aged below five years recorded a more conservative growth of three per cent year-on-year.
Auto Trader also tracked the pricing behaviour of retailers.
During the lockdown period the number of retailers making price changes and the value of price adjustments was significantly lower than normal trading conditions, the firm said.
And while this has increased following the reopening of showrooms last month, the levels are still well below ‘normal’.
Auto Trader said pre-Covid-19, the number of dealers making daily price changes to their stock averaged between 2,500 and 3,000.
But in the last week of June, a daily average of 1,816 retailers made price changes – 33 per cent lower than the same period last year.
In the same week, the average reduction in prices was £256 – in normal trading conditions the average adjustment would be £250-£550 per day.
Auto Trader’s director of data and insight, Richard Walker, said: ‘We’re seeing strong pricing trends at the moment driven by the surge in consumer demand post lock-down and we expect this to continue in the coming months.
‘The most successful retailers continue to achieve the best margins by utilising the retail back pricing philosophy. They use what is happening at a retail level to determine what they pay at trade.
‘This approach feels more important than ever at a time when both the B2B and B2C markets will be driven by different factors.’
Mike Jones, chairman of ASE Global, said: ‘June was undoubtedly a phenomenally strong month for used cars, with many retailers recording record sales during the month.
‘Consumers have emerged from the lockdown with an increased demand for personal mobility and this is reflected in the large monthly price growth reflected in the Auto Trader Retail Price Index, particularly amongst older vehicles.
‘As we predicted having watched the trends from other markets around the world as they opened up after the Covid-19 crisis, the fear of infection has driven an increased demand for car ownership as commuters remain fearful of public transport.
‘The age of the cars increasing in prices, alongside the growth in petrol and diesel values, shows that this is a demand driven by a desire for individual transport rather than part of a wider green agenda.’
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