Consumer demand drives used car value up 8.1% on Auto Trader
A “record” of 73 million Auto Trader visits in May was accompanied by an 8.1% year-over-year increase in the average price of a used car.
The Auto Dealers Retail Price Index, which is based on a daily price analysis of around 9,000 vehicles, found that the average price of a used car in May was £ 13,973.
Auto Trader said this marks the third month the growth rate has accelerated, dropping from the 7.1%, 7.0% and 6.6% recorded in April, March and February respectively.
The past two weeks have seen a “rapid increase,” from an average growth of 7.3% year-on-year in the middle of the month to 8.1% in the past week.
Growth has been driven by the growing imbalance of supply and demand levels in the market; While supply fell -18% in May 2019, consumer demand soared 36%.
Auto Trader said this was reflected in the increase in traffic to the Auto Trader marketplace, which saw a record cross-platform visits last month, surpassing the previous record of 69.3 million in March – a 39% increase from compared to the same period in 2019 and 6% in April.
Richard Walker, Director of Data and Knowledge at Auto Trader, said: “The significant acceleration in retail prices that we are seeing in the market is unprecedented and shows no signs of slowing down.
“It’s critical that retailers respond to the speed at which the market is changing, which means the entire forecourt is adjusted to market price, not just new stock.
“On Auto Trader, we see a significant proportion of older advertised stocks that have not yet been revalued to reflect positive market movement, which not only limits potential margins but also lowers consumer valuations. which are based on all vehicles advertised locally.
Soaring used car wholesale prices are “not recoverable” through increases in retail prices, creating an environment of steadily shrinking margins, said Rupert Pontin, director of insight at Cazana.
The study also found that consumers were spending more time on Auto Trader, spending an average of 11.4 million hours researching their next car, an increase of 34% from 2019, 6% from April and 7% from the previous record of 10.9 million hours in March.
The increased activity resulted in an 81% growth in leads sent to retailers compared to May 2019.
Last month it took an average of 23 days for new stock to leave the forecourt – 21% less than in April (29) and 32% less than in May 2019 (34), marking the speed of sale fastest since September 2020 (23).
Retailers’ pricing strategies highlight ‘market confidence’
Last month, an average of 2,205 retailers made daily price adjustments: 111 less than in April and 366 less than in May 2021. On average, 12,038 vehicles were reviewed each day, or 12% less than in April and 27% less than in 2019..
There has been an acceleration in the number of retailers making positive price adjustments, Auto Trader said, and among retailers who made daily adjustments on their forecourt last month, 32% have increased sticker prices, which is up from 22% recorded in April and 15% in February.
As a result, in mid-May the direction of daily adjustments changed positively, with retailers increasing their prices by £ 31 on average and £ 41 in the last week.
In contrast, in the last two weeks of May 2019, retailers have lowered their prices by an average of -325 and -336 £ respectively.
Prices for premium electric vehicles are falling
Average prices for used gasoline and diesel cars accelerated month over month.
The average price of a gasoline fell from 5.8% yoy in April to 6.5% (£ 12,489) in May, while their diesel counterparts fell from an already large 9.2% yoy in April at a very solid 10.2% (£ 14,557) last month.
Used electric vehicles (EVs) recorded a similar trajectory, with a growth rate falling from 8.2% year-on-year in April to 10.3% (£ 21,067), marking the first acceleration in growth since December.
Premium electric vehicles saw their prices contract -4.0% year-on-year in April to -8.7% (£ 43,525); a result of high levels of supply (220.2% yoy) in the market surpassing a robust level of consumer demand (191.7% yoy), Auto Trader said.
Sue Robinson, Executive Director of the National Franchised Dealers Association (NFDA), added: “The demand for used cars is strong and this is reflected in the upward trajectory in prices that we have seen over the past few months.
“Retailers remain optimistic as consumer confidence improves and the economy continues to recover.”