Average used car prices fell by 5% to £8,620 in Q2 due to an abundance vehicles over 10 years old entering the market as new car demand increases, according to the latest Auto Trader Retail Price Index.
However as demand for newer vehicles rises, the price of younger vehicles has increased, with the price of vehicles under one year old rising 3% quarter-on-quarter.
As younger models are in high demand, a new car may have a greater chance of holding its value into the future.
With new motors and fuel-efficient technology generally offering more miles to the gallon, new car registrations rose for the fourth successive month by 3.5% in June 2012 - driven by demand from private buyers, who bought 9.8% more cars in June 2012 year-on-year.
The fall in used car prices of 5% in Q2 2012 follows a fall of 3.9% in the average asking price of used cars reported in Q1 2012 which was because of an increase in the volume of older stock on the market and a decrease in newer, higher priced vehicles.
This trend has continued in Q2 with the volume of cars more than three years old now at 73% and the volume of cars less than three years old at 27%.
The asking price of used cars more than three years old fell 6.5% (£6,774 to £6,331) while those less than three years old increased by just 0.2% (£14,983 to £15,010) when compared with the same period in 2011.
The biggest year-on-year decrease in average asking price was in London with a fall of 8.0% (£9,644 to £8,915) with Northern Ireland reporting the highest average asking prices closely followed by Scotland. The lowest average asking prices were to be found in the South West.
Running a car was cited as the main financial concern for motorists in Q2 2012 – above paying rent, a mortgage, or job security - with six in ten (63%) noticing the impact of the economy most when it comes to keeping their vehicle on the road, according to the Auto Trader Owners’ Guide.