More than one-in-five nearly new used cars advertised via Auto Trader are now priced above their brand-new equivalents after a further 31.3% year-on-year rise in values during January.
But as prices continue to soar, the online car marketing platform warned retailers that they were still missing out on more than £125m in potential profit as their repricing failed to keep pace with the fast-moving market.
Auto Trader Retail Price Index, which is based on daily pricing analysis of circa 900,000 vehicles, showed that the average sticker price of a used car is now £18,067 – marking a 22nd consecutive month of price growth.
Richard Walker, Auto Trader’s director of data and insights, said: “The January blues have done little to take the heat out of the used car market, which has started the year in a very strong position.
“The ongoing squeeze on new and used car supply, combined with exceptionally strong consumer demand has ensured that the record price growth we saw last year has continued into 2022.
“From what we’re tracking there’s little evidence to suggest that these very unusual market dynamics will change significantly any time soon.
“Simple economics therefore point to a continuation of strong price growth well into the year ahead.”
Supply and demand
Auto Trader claimed that its volume of consumer enquiries had increased by nearly a third (31%) last month, on a year-on-year basis.
But it said that retailers are failing to cash-in on the market dynamics at play, with a failure to price market risking £125m – over £11,000 per retailer – in lost profit.
Far from being a trend that retailers are addressing, Auto Trader claims it has seen the profit gap widen from a potential profit loss of more than £93m (circa £9,000 per retailer) in August 2021.
Highlighting the strength of the sector, Auto Trader said that more than one in five (21%) of the nearly new cars currently available (those aged up to 12 months) are more expensive than their brand-new equivalents, with nearly half (46%) priced within 5% of the RRP.
Despite this, nearly new cars were leaving forecourts 24% faster in January 2022 than they were in January 2021 (an average of 41 days vs 54), it said.
Among used cars below five years old, prices across all brands rose by least 11% (Aston Martin) last month, Auto Trader reported, but at the top end of the scale, volume brands including Ford (42%), Skoda (41%) and Suzuki (39%) saw almost four times that level of growth.
Petrol car process have risen 32.7% (to £16,841) and diesel 31.4% (£17,876), as demand for petrol increased by 9.7% year-on-year, whilst supply decreased by 5.1% and demand for diesel was flat (0%), but supply dropped by 14.2%.
Both premium and volume electric vehicles (EVs) saw large month-on-month (MoM) increases.
Volume brand EVs increased by 32.2% year-on-year (to £26,502), up from 30.4% growth in December, whilst premium brand EVs continued to catch up the pace, growing at a rate of 17.8% (to £50,528), up from 15% the prior month.
Auto Trader claimed its data suggested that demand for volume EV brands increased 80.2% (up from 60.4% YoY in December) and premium by 44.2% (up from 44% YoY).
Sue Robinson, Chief Executive, NFDA commented: “Used car prices remain high as a result of supply constraints adversely affecting the global market.
“Nevertheless, dealers are optimistic, reinforced by consumers’ growing appetite for electric vehicles.
“Despite challenges, most notably relating to supply, consumer confidence remains robust for the year ahead.”