Site audience continues to grow with the balance of supply and consumer-driven demand pushing used car prices up
By Richard Walker, Data & Insight Director, Auto Trader.
Used car prices remain strong with growth expected to continue
The average price of used cars has seen continued growth each week since May and this growth is accelerating.
In the week commencing 13 July, the average price of a used car increased by 4.7% year-on-year (on a like-for-like basis) to £14,992. Looking at the data on a more granular level, it’s a positive picture across segments, ages and fuel types. The average price of a petrol car grew by 5.7% (year-on-year), having seen sustained growth for 20 weeks. For the same time period, the average price of diesel cars grew 4.5%.
It’s not just that prices are up right now; ever since retailers have been able to restart their sales, used car prices have seen sustained growth for more than 10 weeks and it’s clear this growth is accelerating. It’s imperative to consider all market factors when evaluating price. Price is driven by supply and consumer-driven demand, and although supply has been constrained with auction houses being slower to reopen since lockdown, they are returning to over 90% of pre-COVID-19 levels. Thanks to our massive audience share of car buyers and 64 million cross platform visits in June, we have a robust picture of consumer demand which outweighs supply greatly and there’s no signs of this slowing. Consumer confidence seems relatively robust too, with 82% of those surveyed in June saying they are ‘as confident’ or ‘more confident’ in being able to afford their next car than they were a year ago.
Buyer demand on Auto Trader is strong with leads to retailers up over 60%
Looking at Auto Trader internal data, the chart below shows the volume of daily visitors compared to last year. Last week up until 19 July we continue to see a much stronger performance as the volume of new audience is up 19% vs. last year continuing to an average 1.4m users per day. This is compared to a category growth of just 4.2% for automotive which is measured by SimilarWeb, who provide an independent view of audience across different websites including: Auto Trader, CarGurus, PistonHeads, Motors, Carwow, Cinch, and HeyCar.
Last week, advert view volumes were 22% higher than last year showing the additional audience is even more engaged with the stock advertised. The biggest growth we saw again was leads, where volumes were up 62% compared to the previous year.
Call volumes continue to increase, and we are seeing over 100% growth on pre-lockdown volumes.
Retailer pricing behaviour is moving towards, but still below, normal levels
We continue to see strong indicators from our retailer customers that they are selling strong volumes of used cars across all price ranges in July. We track three key factors of retailer pricing behaviour:
1. The number of retailers making price changes
Pre-COVID, the volume of retailers making price adjustments was on average 2,500-3,000 a week, this number declined dramatically during lockdown. This week the average volume of retailers making price adjustments was 2,046, which is the busiest week we have seen since restrictions have eased – however, that’s still 22% lower than the same period last year.
2. The number of stock items being re-priced
Pre-COVID 19 volumes of vehicles being re-priced each day fluctuated between 17,500 and 24,000. This week, saw 9,300 vehicles re-priced, which is still 40% down compared to last year. 53% of this stock was sat with franchised retailers and 47% with independents which is pretty representative of what we would have normally seen in the market.
3. The average amount of price changes
Normal conditions would see price reductions averaging between £250-£550 per day, last week the average reduction was £283 which is at the lower end of normal.
However, those that are making price changes are doing the following: 21% are increasing prices; 7% are holding them; and 72% are reducing them – which is closer to what we would expect to see.
From a pricing perspective the return to pre-lockdown levels still feels gradual, edging towards the normal volumes of retailers we would expect to see but still on a lower volume of stock and with reductions being at the lower end of the range we would normally see.
We can see the impact of this coming through in valuations and the retail pricing on our platform. Like-for-like prices are up for all age brackets and body types of vehicles, with volume brands showing a stronger performance than prestige brands. This doesn’t mean all cars will have stronger pricing than last year as it does come down to supply in the market and the demand from consumers on our platform. Therefore, we continue to recommend the use of our Market Insight tool as well as our other tools designed to support your vehicle pricing decisions.