Used car prices hold steady, older cars drive demand in May

The used car market continued its steady recovery in May, with stable prices, healthy consumer demand, and solid transaction volumes characterising the month.

According to Auto Trader’s latest Retail Price Index, the average price of a used car stood at £16,825 - unchanged year-on-year for the second consecutive month, following 19 months of sustained price contraction.

Retail prices dipped slightly by -0.7% month-on-month, a movement in line with typical seasonal trends. Historical data from Auto Trader, which tracks over 800,000 daily pricing observations, shows May price drops are consistent with post-April patterns every year since 2011, bat the pandemic years of 2020 and 2021.

Consumer interest remains robust, with Auto Trader recording over 84 million visits in May, a 2% rise year-on-year. This follows a 10% surge in May 2024 and a small dip in April, attributed to late Easter holidays and unusually good weather.

More significantly, demand is shifting toward older vehicles. Interest in 5-10-year-old cars rose by 4.5% year-on-year, while demand for vehicles over 10 years old soared 10.4%. This translated to above-average price growth in these segments: 5-10-year-old cars rose 1.4% to £13,705, and 10+ year-old models increased 2.6% to £6,555.

Conversely, demand fell for newer models: 1-3-year-old cars dropped -2.4% and 3-5-year-old cars declined -9.1%, reflecting tighter consumer budgets and stock profile mismatches at some franchise forecourts.

Despite these shifts, used cars continued to sell swiftly. The average time to sell remained 30 days, consistent with May 2024 and a day quicker than 2023. Mid-aged cars (5–10 years old) sold fastest, averaging 28 days, while newer models (1-3 years old) took 34 days to shift.

Retail sales driven by independents

Auto Trader’s sales data showed used car transactions rose around 1% year-on-year in May, continuing momentum from a strong Q1 and a resilient April. Independent retailers led this growth, benefiting from increased appetite for older, more affordable vehicles. Their sales were up approximately 4.2% YoY.

In contrast, franchised retailers saw a dip of around -1.8% YoY. Analysts attribute this to limited stock of 3-5-year-old vehicles, an influx of higher-priced 1-3-year-old models, and competition from new car sales.

The fuel mix of demand is also evolving. Traditional petrol and diesel cars saw declines of -0.5% and -9.7% respectively. In contrast, demand for electrified options is climbing rapidly: hybrid and plug-in hybrid interest rose by 16% and 27%.

Most notably, used electric vehicle (EV) demand soared 31% year-on-year, driven by falling prices. The average price of a used EV dropped -7.4% to £24,370. This contrasts with modest price increases for petrol (0.5%) and diesel (2%) cars.

For 3-5-year-old vehicles, the trend is more pronounced. EVs in this age bracket are now cheaper on average (£18,266) than petrol counterparts (£18,731), thanks to a steep -11.6% YoY price drop.

Marc Palmer, Auto Trader’s head of strategy and insights, commented: “Although Q2 has seen a slight softening from a strong start to the year, the used car market remains in solid shape. With stable prices, consistent demand, and fast stock turn, retailers who can source the right vehicles - particularly older models - are well positioned to thrive. The market is nuanced, but the opportunities are there for those leveraging data and insights to target high-potential segments.”