Auto Trader has once again renewed its call for car retailers to “hold firm with their prices” amid optimism that pricing will remain strong in Q1 – despite the showroom closures of COVID-19 ‘Lockdown 3’.
The online classifieds specialist reported that used car prices had risen by 4% across 2020, compared to 0.5% in the previous year, indicating that the market had been buoyed by retailers’ decision not to lower prices in response to the coronavirus pandemic.
Auto Trader’s director of data and insight, Richard Walker, said: “Consumer demand, along with constrained supply, is sustaining price growth, so, far from requiring a big correction in pricing, with such strong engagement we have every reason for optimism that prices will remain strong in Q1.
“As with the previous lockdowns, we strongly urge retailers to trust the data and continue to hold firm with their prices, which as we saw throughout 2020 helped ensure retailers achieved much stronger margins than if prices were adjusted unnecessarily.”
In December, 1,937 retailers made price changes, which was 4.2% fewer than in December 2019, whilst the average daily reduction was £262 – 7.6% less than the same time last year.
The average number of cars being changed each day was 13,082, which is far fewer than the 17,500 to 24,000 typically adjusted during normal trading conditions.
The average price of a used car in December was £14,085, meanwhile, a year-on-year (YoY) and like-for-like increase of 8.1%, marking the ninth consecutive month of growth
Walker said: “Encouragingly, we can see that the tighter restrictions rolled out across the UK throughout December had little impact on the levels of consumer demand.
“Whilst sales capabilities were limited to click and collect and home delivery, we saw millions of consumers visiting our marketplace and engaging with our retailer partners, which suggests there was a healthy market available.
“Early signs suggest that January consumer demand will remain robust, despite the recent increase in restrictions.”
Price changes by fuel type
Auto Trader said that it had seen consumer demand for petrol vehicles increase 0.6% YoY in December, whilst the levels of supply grew 3.5%.
It said that the “minor imbalance” between supply and demand had resulted in a “slight easing in the rate of price growth for used petrol cars, slowing from 8.8% YoY in November to a still very high 8.1% last month”.
The average sticker price of a petrol car was £12,751 on Auto Trader during December.
Diesel car prices also saw an easing, slowing from a record 9.2% in November to 9% last month, with an average price of £14,741.
According to Auto Trader, demand for diesel fell, however, down 7.7% YoY, whilst levels of supply fell 13%.
It added: “In contrast, electric vehicles (EV) continue to record exceptionally strong levels of demand.
“Premium EVs saw demand increase 80.8% YoY in December. However, with a much stronger level of supply in the market, which was up 223.9%, prices contracted slightly, decreasing 1.70% YoY (£46,432).
“Whilst demand for volume EVs was slightly lower, up 58.7% YoY, the gap between levels of supply was far smaller, at 86.9%, helping to drive average prices up 16.20% (£19,197).”
In its market report, published today (January 11), Autorola blamed rising used EV values for a trend which had left used EVs ‘unsold on dealer forecourts’ in 2020.
Festive site visits
Auto Trader reported that visits to its online platform had increased by over 20% during H2 2020, with 52.3 million visits in December alone.
During the course of the entire year, it saw over 673 million visits to its marketplace – an 11% increase on 2019.
Whilst traffic eased during the run up to Christmas, it accelerated dramatically shortly there afterwards and into the new year, Auto Trader said.
From December 27 to January 3, it said that visits and advert views grew 30% and 33% compared with the festive period (December 24 to 26), resulting in a 65% growth in the number of leads being sent to retailers.