Our latest analysis of used car prices - December
Our latest data indicates that the used car market has entered the New Year in a robust position, with retail prices and consumer demand stable in December. Our Retail Price Index, which is based on daily pricing analysis of circa 900,000 vehicles across the market, and as of this month used by the Office of National Statistics to feed its inflationary measures, reveals the average retail price of a used car was £18,030 in December. It marks a 3.1% year-on-year (YoY) increase on a like-for like basis.
Although the rate of growth is down on previous highs, last month’s performance is off the back of the massive 30.5% YoY increase recorded in December 2021. And highlighting just how quickly and how sharply used car prices have risen in recent years, the average retail price of a used car in 2022 was a record £17,548; up considerably on the £15,204 recorded in 2021, the £13,538 in 2020, and the £12,999 in 2019.
As per typical seasonal trends, retail prices saw a marginal decline between November and December, dipping -0.4% on a like-for-like basis. Apart from 2021, average retail prices have fallen month-on-month every December since Auto Trader began tracking them in 2011 (e.g., dropping -0.4% in 2020, -0.2% in 2019, and -0.9% 2018), which is a consequence of the market easing over the festive period.
Consumer engagement sees December boost
Although consumer demand softened last year against 2021’s unusually high performance, it remains robust and well ahead of pre-pandemic levels. This is reflected on our marketplace, which saw the volume of used car enquiries being sent to retailers increased by 27% in December, versus the same period in 2019.
More broadly, we saw a significant spike in visits to its marketplace in December, increasing circa 10% YoY to nearly 61 million visits, which was due, in part, to our brand-new multi-million-pound marketing campaign, which launched on Boxing Day.
A further indicator of market health is the speed at which used cars leave retailers’ forecourts. Our data shows that used cars took an average of 29 days to sell in December, which is the fastest December since the start of the pandemic. Although taking marginally longer to sell against 2021, cars sold faster in 2022 compared to pre-COVID levels, taking a monthly average of just 29 days to sell. This is versus a monthly average of 27 days in 2021, 31 in 2020, and 30 in 2019. The fastest-selling used car in 2022 was the Toyota Yaris Cross, which took an average of just 16 days to sell.
Market on firm footing for the year ahead
As it enters what’s set to be an uncertain year for the economy, these metrics offer a reassuring and stable outlook for the used car market. Whilst consumer demand may continue to soften, the market should be shielded to some extent from the full impact of the deepening cost of living crisis. This is due to a few key factors, not least the fact that for most, a car is a fundamental need, as highlighted in a recent study we conducted, which found that more than three-quarters (77%) of the 2,000 people surveyed need a car to get around (up from 71% in February 2020). Personal car ownership has only become more important in the wake of recent train strikes - the same research revealed that the disruption to public transport was cited by 50% of respondents as a key reason for owning a car (up from 36% in February 2020). This trend is only set to increase with no end to the disruption in sight.
Stable levels of consumer demand, coupled with the ongoing constraint in supply (which shows no sign of improving anytime soon, and has been a big contributing factor to recent price stability) will ensure used car prices remain strong well into 2023. In turn, strong prices will continue to help maintain healthy profit margins.