An update from our CEO
Watch, or read below the latest update from Auto Trader CEO, Nathan Coe on the different dynamics in the market and how we’re supporting your success.
As always, I hope you, your families and colleagues had a restful summer and that the all-important September trading month has started well.
The used car market remains robust
The good news is that the underlying health of the market is strong, with good demand, robust pricing trends and encouraging speed of sale. That said, we are all operating in a market where understanding performance by segment has never been more important, with different market conditions impacting Electric vehicles, older vehicles and brands. This means that headlines talking about the overall market can often be taken out of context or be a distraction. When I think back to the start of 2023, I heard many examples of retailers who, at the back end of last year, listened to speculation that a recession was imminent and consequently changed strategy, were cautious with sourcing new stock, only to be met with a buoyant market in January and be left playing catch up. As performance varies dramatically between different market segments, it’s more important than ever that we all follow the data, and the detail, to make key sourcing and pricing decisions.
There is no doubt that the UK is experiencing an uncertain macroeconomic backdrop. Inflation is relatively high but is starting to drop and is now at its lowest level since the Russian invasion of Ukraine, which will hopefully lead to a more stable interest rate environment. As ever, despite some of these headlines, we continue to see that there is little to no correlation between used car transaction levels and these indicators. This has been the consistent trend over many years and remains the case today. As a result, we’re seeing strong levels of consumer engagement on Auto Trader with cross-platform visits up 14% on last year for August and crucially those buyers visiting Auto Trader are still confident; with 85% at least as confident as they were last year in affordability and three in four looking to purchase in the next six months. Used cars are also selling quickly, averaging 29 days in August, 2 days faster than July and a day faster than August last year. So, whilst pressures remain for households, they continue to prioritise and look to used car transactions as an essential purchase, and this looks set to continue.
Focus on understanding trends in your market segment
There is no doubt the new car market has reached a pivot point in the last few months. After years of constrained new car supply struggling to keep pace with consumer appetite, for the first time since the pandemic, we’re seeing production exceed underlying demand levels. Supply of under-three-year-old vehicles was up 14.4% in August and overall stock levels on our platform grew 1.1% in August – the first positive market growth since November 2022.
As supply starts to return in the new car market and more younger stock flows through this is likely to drive some softening of retail price growth for this age cohort of vehicles.
In contrast, the supply, demand and pricing dynamics remain very different for vehicles registered over three years ago. For example, pricing for vehicles older than 10 years was up 10.8% in September, driven by very strong demand and continued supply constraints.
The electric vehicle market remains immature, but used price softening is slowing
Now, the road to 2030 has seen many twists and turns this year, with demand and prices falling at the start of the year only to be followed by a strong rise in demand for used EVs, driven by the significant price correction we have seen. The volume of EVs entering the used market remains high, with 97.4% year-on-year growth in volume of 0–3-year-old stock advertised in August and consumer demand is up nearly 50%.
Whilst this means overall market health has been negative (supply is ahead of demand), demand overall is strong and growing. We’re seeing early signs that this will shift to being positive in the coming weeks and are already seeing demand ahead of supply for some makes and models. This data is all available to you live in the Market Insight product pages in portal, which can be found here. If you’d like to understand more about how and where these tools work, please do get in touch with your account manager or one of the team.
We are here to support you
So, despite some of the headlines, when you look at the data, the market remains robust, consumers are prioritising their next vehicle purchase, and you should have confidence when armed with the right data. Understanding what’s happening in a complex market and how you should respond can be confusing, but with the support of our people and our data I believe can help you to navigate this. Our amazing account team is on hand to help you find the right areas of focus and to ensure you reach your goals. Over the past 12 months, they have perfected our 15-minute Focus Finder approach, which aims to work with Retailers to do just this. The team will personally review your market, discuss your strategy, and help you hit your targets. So, please do reach out to see how we can work together to achieve your business ambitions.
As ever, our product, data and technology teams are working hard to bring you even more insights, served in your existing processes and tools to help you drive performance even further. One of the reasons we obsess about market trends and data is so that we can create and build the best possible solutions for you, based on what we see changing in the market. We made our live retail market valuations available to all Retailers earlier this year as part of packages and we'll be announcing more on this soon. You can expect more real-time data integrated into portal and through our Auto Trader Connect platform soon.
Thank you for your continued partnership and do not hesitate to get in touch if there’s anything you’d like to discuss directly with me.
More in-depth discussion on this topic in our latest webinar
Nathan spoke last week with Lookers Chief Operating Officer, Duncan McPhee, about these trends in more detail and addressed the government’s decision to delay the ban on the sale of new petrol and diesel cars to 2035. Watch now to hear two industry leaders discuss the market and the impact of this announcement.
