Auto Trader has reported that the average price of a used car offered for sales on a dealer forecourt reached a record high of £12,853 during September.
While the new car market felt the pinch from the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) regulations last month, growing demand for used car stock was translated into a 5% month-on-month rise in the average value.
Auto Trader noted that the latest rise followed a period of sustained growth for used prices, which have grown twice as fast as their new counterparts since the start of the decade.
The average price of a used car has risen from £8,997 in 2011, to £12,731 in 2018, a significant 42% increase in just seven years.
In contrast, the average sticker price of a new car has grown just 19% during the same period (£21,911 to £26,105), Auto Trader said.
Auto Trader attributed the value growth to a rise in new car finance volumes, which in 2017 accounted for 88% of all new cars bought in the UK, compared to around 50% of sales a decade previously.
With the average two to three-year ownership cycle of a Personal Contract Purchase (PCP) contract, there has been an increase in younger, more advanced and, crucially, more valuable, second-hand cars entering the market, driving average prices up.
While many used car retailers are feeling the pinch as a result of rising wholesale stock prices, Auto Trader believes that the “resilient” market continues to present opportunities.
Auto Trader’s director of commercial products, Karolina Edwards-Smajda, said: “Whether it’s the ongoing Brexit and fuel type anxieties denting consumer confidence, or new WLTP regulations, the industry has faced unprecedented challenges this year.
“However, our data highlights just how resilient the used car market has been despite these turbulences and importantly, the opportunities available for retailers.
“Whilst it might only currently account for around 35% of purchases, as younger, more desirable and more valuable vehicles reach forecourts, we can expect the appetite for used car finance to surge.
“Car buyers often complain that they’re put off by the complex and confusing finance process, so simplifying it and using clear, jargon-free language, will be the key to capitalising on the increase in consumers looking to pay monthly for their next car.”
Auto Trader data showed that, over the past five years, sales of used cars aged less than three-years-old have increased by nearly a third (32%), whilst sales of five-year-old and ten year-old-cars have dropped by 3% and 7%, respectively.
In terms of specific fuel types, the average price of a second-hand diesel in September was £14,551; a 4% like-for-like increase on the same period last year.
For a used petrol car, consumers paid £11,043 on average last month, which saw the fuel-type continue to outstrip diesel with a 6% year-on-year increase.
In September alternatively-fuelled vehicles (AFVs) accounted for 6% of all fuel related searches on Auto Trader, marking a 2% increase in the past two months (5%in August 2018).
Auto Trader said that the sudden growth in popularity was significant as AFV related searches remained flat at 4% between July 2017 and July 2018.
Diesel still account for 48% of all fuel-related searches on the platform last month, remaining flat on the previous month.
Petrol, however, saw a slight fall in searches, dropping from 46% of searches in August, to 45% in September.