Used car prices firm as consumer demand increases

08 June 2020 | David Young

According to the latest data from Auto Trader's Retail Price Index, based on pricing analysis of circa 900,000 vehicles every month, the average price of a used car in May was £13,931. Equating to a 1.9% year-on-year increase.

Used car prices firm as consumer demand increases

This is the first used price growth since July 2019 and is contrary to what some commentators had predicted and reflects a market which has largely been paused during lockdown. Rather than slashing prices, Auto Trader's analysts have observed the number of car retailers making price changes, the number of vehicles being repriced, and the value of price adjustments made over the last 10 weeks has been significantly lower than normal trading conditions.

Last week [23-30 May] a daily average of 1,135 retailers made price changes to their stock, which is 54% lower than the same period last year. On Monday 1 June, when retailers in England were finally able to reopen their showrooms, this increased, but only marginally, up to 1,381.

In terms of the volume of cars being adjusted, last week an average of just 6,159 vehicles were re-priced every day which is down 60% year-on-year, and significantly lower than the 17,500 – 24,000 typically adjusted daily. Last Monday, this increased to 6,379.

In normal conditions, retailers adjusting their stock do so between £250 - £550 per day. Further pointing to a paused market, the average amount of the reduction last week was £178, and even on 1 June, this only increased to £214.

Last week, the number of leads being sent to retailers increased 75% year-on-year, and on 1 June, surged to 108% as consumers can't just 'turn up' to a dealership without prior contact. Looking specifically at new cars, the number of leads increased 111% on Monday from a record stock volume of over 50,000 physical new cars.

Commenting on these observations, Richard Walker, Auto Trader's director of data and insights, said:

Given the negative impact it could have had on the financial health of the market, it's a huge relief to see that despite the huge pressure over the last 10 weeks, retailers have remained firm and resisted the urge to lower prices. And with consumer demand surging this week, it's clear it was absolutely the right decision.

"The reopening of showrooms in England this week marks an important first step on the industry's road to recovery, but with trade auctions remaining closed, the challenge retailers currently face will not be selling cars, but rather restocking them. Such high levels of demand, coupled with a low level of supply, retailers can afford to continue holding firm. Retailers should be confident in their pricing and use accurate and up to the minute data, tools and insight to back up their pricing decision."

Source: Auto Trader