Strong levels of consumer demand in the market is continuing to drive used car price growth on Auto Trader, according to its latest data.
The average price of a used car increased by 12.6% year-on-year (YoY) on a like-for-like basis last week (as of July 12, 2021), marking 63 weeks of consecutive price growth, as well as an acceleration on a 5.7% increase recorded during the week of April 12, 2021.
There were over 14.7 million cross platform visits last week to Auto Trader, a 24% increase on the same week in 2019 and a 14% rise in the hours (2.2 million) consumers spent researching their next car on the marketplace.
The average number of leads being sent to retailers grew 54% compared to the same period in 2019.
Last week, it took an average of 23 days for stock to leave forecourts, where it took 43 days at the start of the year, according to the data.
Auto Trader’s director of data and insight, Richard Walker, said: “The ongoing price growth represents a huge opportunity for retailers, and whilst there are concerns over inflated trade prices, I hope the evidence of our data gives retailers the confidence to buy knowing the very positive trade margins available.
“Encouragingly, wider economic factors, as well as a positive sentiment shift towards car ownership, an aversion to public transport, and the 1.7 million sales ‘lost’ in 2020 while physical showrooms were closed, indicate this high level of car buying demand will continue for the foreseeable future.
“It’s for those reasons coupled with the huge success retailers have made in adapting to the changing retail landscape, we can be confident of sustained levels of used car sales throughout the year ahead.”
Strong sales performance
Many retailers are reporting strong used car sales performance, with current sales volumes up around 4% compared to 2019, according to Auto Trader’s proxy sales data.
Auto Trader said a snapshot taken on July 1, found circa 700 used vehicles priced higher than their brand-new counterparts, whilst one in five nearly new cars on Auto Trader are priced within 10% of their new car equivalents.
It said there are models achieving high prices after two years of purchase, with 87 different variants advertised on Auto Trader currently priced at 80% of RRP or more.
Retail prices of used cars increased by 11.1% in June, suggesting that dealers have been making efforts to realign their advertising to accomodate recent months wholesale price purge.
Despite concerns over current trade valuations, a positive consequence of the surge in retail prices is the potential margins available, it said.
Comparing the hammer prices of 45,000 vehicles on Dealer Auction with the final advertised prices on Auto Trader during January to June 2021, revealed most retailers have been able to achieve strong margins.
These have widened since physical forecourts reopened in April, and cars priced between £5,000 - £10,000 are recording the strongest growth in margin, increasing 13.3% (an average of £215) on pre-pandemic levels.
Pricing behaviour underpins retailer confidence
Auto Trader said it continues to see fewer retailers adjusting prices on fewer vehicles.
An average of 2,126 retailers made daily price adjustments last week, which is circa 425 fewer than the same period in 2019. An average of 11,175 vehicles were repriced every day last week, 26% fewer when compared to 2019.
The data also suggests retailers were making smaller reductions to sticker prices, averaging at just -£139, which is 60% less than the average adjustment made in 2019 (-£344), said Auto Trader.