The latest on used car pricing and speed of sale
The much-publicised new car supply shortage combined with the surge in consumer demand that we’ve seen through the pandemic have resulted in the automotive retail market booming over the last 18 months. Many retailers have reported record sales with record profit levels as demand has continued throughout this period.
But with the UK seemingly heading towards the end of the pandemic, what are we currently seeing with pricing & speed of sale and when can we expect market conditions to return to “normal”?
The latest on used car prices
As yet, there are no signs of prices starting to drop with the week of the 8th November seeing average prices increasing a massive 26.9% on a year-on-year and like-for-like basis. This marked 80 weeks of consecutive price rises.
In fact, the last five months have seen a drastic rise in prices and represent a staggering four years of price growth when compared to a forecast based on the historic price growth.
Prices remain strong for all age bands 3-5 years old stock continues to be strong and is up 31.1% year-on-year, with 1-3-year-old and 5-10 yearr old just behind at 28.2% and 25.4% respectively. Up to 1-year old stock now has an average asking price of £32,500 up 19% on last year, in the summer this growth was at 10% vs previous year to give some context to this acceleration of growth.
Used car price growth by age band:
Up to 1-year-old stock risen from circa 10% growth in price in summer to 19% in recent months. Average asking price is currently £32,500.
1-year-old – 3-year-old risen from circa 10% growth in price in summer to 28% in recent months. Average asking price is currently £24,800.
3-year-old – 5-year-old risen from circa 17% growth in price in summer to 31% in recent months. Average asking price is currently £20,000.
5-year-old -10-year-old risen from circa 13% growth in price in summer to 25% in recent months. Average asking price is currently £11,800.
10-year-old -15-year-old risen from circa 12% growth in price in summer to 19% in recent months. Average asking price is currently £5,200.
15-year-old stock has gone from circa 10% growth in price in summer to 9% in recent months. Average asking price is currently £5,200.
Are cars still selling quickly?
Despite retail prices rising, we’re continuing to see the average time (based on the median) it takes for used vehicles to leave retailers forecourts drop, a clear sign that rising prices are not putting buyers off.
Right now, it is the SEAT Alhambra that is the fastest selling of all used cars, taking a mere 15 days to sell on average. This is one of the lowest average days to sell figures we have ever reported.
Despite internal combustion engine vehicles dominating the top ten, our data has shown a stunning decline in the average time it takes for a used electric vehicle to sell. On average, a used EV can expect to sell in just 26 days right now, two days faster than the average time it takes to sell a used petrol vehicle and two days slower than a used diesel vehicle. This is a drop of 18 days from the start of 2021, where used EVs were taking an average of 44 to sell on UK forecourts. This staggering shift in days to sell can be attributed to a surge in consumer demand with demand for EVs up 122.6% year-on-year.
To help understand where this demand is stemming from, we’ve released our The Road to 2030 report which includes details of what needs to be done to drive EV uptake as we approach the 2030 ban on petrol and diesel sales.
The 2017 Nissan Leaf is the current fastest selling used electric vehicle (EV) in the UK, taking an average of just 20 days to sell and beating out competition from the Renault Zoe and Tesla Model 3, both of which took home trophies at this year’s Auto Trader New Car Awards.
The much-publicised new car shortage has been a contributing factor in the surge in demand for used cars. Its impact is amplified in the nearly new, under one-year old used market where we’ve seen instances of prices of such vehicles rise above the new sticker price. Despite this, our data shows that the days to sell for these vehicles continue to drop, such is the current demand for nearly new vehicles, with the 2020 Toyota Prius+ (petrol hybrid automatic) being the fastest selling of all nearly new vehicles.
When will prices drop and the market return to “normal”?
There’s no question that the current market is, whilst welcome, not going to continue. But there are currently no signs of prices dropping any time soon.
Our Data & Insight Director Richard Walker explains that the new car supply will impact the used market for several years, with the volume of new cars flowing into the used market set to be significantly lower in the coming years. Richard also explains that, whilst harder to predict, all our indicators show no signs of a decline in demand from consumer.
When we combine these two views, along with macro-economic indicators of general strength in economy and employment it helps us then understand market dynamics and that is what feeds our models around pricing outcomes going forwards.
There is nothing to suggest that there will be a big drop coming and other than seasonal movements that we expect signs are pointing towards a strong demand in 2022 with continued shortages of supply so prices we think will stay strong.
We will have a lot of indicators to help us see the warning signs for when we should expect prices to soften so keeping your eyes and ears peeled for our insights and using the tools we make available, such as Market Insight, is crucial in the coming months.