Car retailers balancing supply and demand during COVID-19 ‘Lockdown 3’ trading have delivered a 41st consecutive week of rising used car prices on the Auto Trader classified advertising platform.
According to data drawn from 514,000 vehicles advertised last week (February 8 to 14) average prices increased 6.5% year-on-year (YoY) on a like-for-like basis, Auto Trader has reported.
The rate of growth slowed slightly from a peak of 8.5% in mid-December, but the movement marks 41 weeks of consecutive price growth.
The continued growth came as almost half of used car retailers told a survey run by Cox Automotive’s NextGear Capital funding division that they expected their profit margin to improve in 2021.
In its market update, published today (February 19), Auto Trader said that, despite “some continued pressure on supply”, the latest coronavirus lockdown restrictions were having less impact on demand than previous lockdowns.
Last week, there were 14.2 million visits to Auto Trader, which is an increase of 4.5% on the same period last year and consumers spent a total of 139.6 million minutes on the marketplace, up 4.4% YoY, it said.
Commenting on the used car market’s ongoing value growth trend, Auto Trader’s director of data and insight, Richard Walker, said: “Whilst the current challenges are clear, we continue to see reasons for positivity, and expect to see another period of healthy retail demand once restrictions are eased.
“In addition to the strong consumer metrics we’re recording on our marketplace, there are a number of key external factors which will help drive strong automotive demand post lockdown.
“These include positive sentiment towards car ownership, the ongoing aversion to public transport and reduced spending in other retail categories.
“What’s more, the latest Bank of England findings show average household finances are better off than they were pre-pandemic.
“This reflects our own research which suggests consumers' confidence in being able to afford their next car was at its highest level since we began tracking it in January 2020.”
Despite growing household savings, AM reported earlier this month that the Bank of England (BoE) had said 70% of consumers will hold on to any savings they managed to accrue during COVID-19 lockdown.
While the BoE has said that private savings accounts were up £125bn in 2020, despite the economic uncertainty and growing risk of redundancies, uncertainty remains as to whether car buyers and high street shoppers will spend the nation back to economic health.
Respondents to a survey conducted by the BoE revealed that more than two-thirds of consumers were likely to hold-on to their cash as uncertainty persists.
While used car retailers keen to maintain a buoyant market and benefit from strong profits when trade returns to showrooms have continued to follow industry calls to ‘hold firm’ on any pricing changes so far, Auto Trader said that adjustments were returning to normal volumes.
It said that the number of those making price changes and the value of their adjustments is generally in-line with pre-COVID levels and consistent with what would normally be expected in January and February.
Last week an average of 2,448 retailers made daily price adjustments, which is just four fewer than the same period last year.
A total of 17,608 vehicles were repriced during the week, and in terms of the adjustments being made, the average reduction was £290, which is at the lower end of the £250-£550 typically adjusted during normal trading conditions.
Auto Trader said this was “Indicative of retailers holding firm with their pricing strategies.”