Plummeting prices of younger used cars and second-hand EVs are holding back further increases in overall prices, Auto Trader has said.
The average retail price of a used car in August was £17,732 – a 1.1 per cent increase compared to the same month last year, Auto Trader’s latest Retail Price Index revealed.
The growth was far smaller than the percentage increases seen in August 2022 and 2021, which were up 15.6 per cent and 17.2 per cent respectively.
Overall, however, the average price of a used car was up by a whopping 36.9 per cent last month on August 2020.
Prices in August were 0.8 per cent lower than July, but that reflected ‘typical seasonal patterns’, said the company.
While August showed an uplift in the average price of a used car, the Auto Trader data revealed that the increase would have been larger if prices of younger cars and used EVs hadn’t plummeted during the month.
The average price of a used car aged up to three-years-old was £29,699 – a 3.5 per cent DROP on August last year and a 0.9 per cent month-on-month fall.
Better supply of these vehicles and higher consumer demand were the reasons for the price decreases, said Auto Trader.
The falling prices of younger used cars is being ‘compounded’ by plummeting prices of used electric cars and more cars entering the market.
Used EV volumes rocketed by 97.4 per cent in August.
Meanwhile, the average price of a used EV stood at £31,618 – a massive 22.6 per cent decrease on prices seen in August 2022.
The pure-electric Audi e-tron was the biggest depreciating used car overall in August, falling by a massive 24.9 per cent year-on-year.
The electric Audi SUV was followed by the Mini Electric (-23.9 per cent) and Peugeot e-208 (£-22.5 per cent).
The top five biggest depreciating used cars were all electric.
Despite this, Auto Trader said there were no signs of an imminent price crash – echoing words said by Cap HPI to Car Dealer last month, when it was revealed used car values have fallen by two per cent, making it the worst August for 13 years.
Commenting on the latest data, Auto Trader’s director of data and insight, Richard Walker, said: ‘We’ve been seeing growing levels of volatility in the market over recent months as levels of Covid related new car supply gradually improves.
‘However, headline figures can be deceiving, and as ever the devil is in the detail, because contrary to what it may suggest, the market remains full of pockets of profit potential.
‘Our figures should serve as a clarion call for retailers: in such a nuanced market it’s vital to follow the data, and not the headlines to inform pricing and stocking strategies.’
He added: ‘As supply levels of younger stock improves, particularly of electric vehicles, it’s likely we’ll continue to see a softening in prices over the coming months.
‘However, with no sign of a dramatic change in consumer appetites, there’s certainly no indication of prices falling off a figurative cliff edge.
‘There’s still very strong pricing pockets available, including with used EVs – the demand is there, so if retailers use data to buy them and sell them at the right price, there’s plenty of profit potential available.’