The latest on used car prices

The used car market continued to build momentum in February, recording robust used car demand, speed of sale, and transactions. There was also growth in used car prices, with the average used car rising 0.5% on a month-on-month and like-for-like basis (£16,671), marking the first monthly increase in retail values since October. 

The price increase has been fuelled, in part, by the ongoing squeeze in used car supply, which overall fell 2% year-on-year (YoY) in February, combined with strong levels of used car buying demand. This is evident in the increase in used car transactions last month, which our Retail Sales data indicates rose circa 3% on the same period last year. 

The robust underlying health of the used car market is reflected in the strong consumer engagement on our platform, which saw a +2.8% YoY rise in the number of average daily visits to our platform last month. 

It’s also highlighted by the current speed at which used cars are selling. Last month, it took an average of just 28 days for a used car to sell, the fastest pace recorded since September and consistent with the same period last year. Highlighting the nuance of the retail market, there were significant variances in speed across different segments; for example, 5–10-year-old cars left retailers’ forecourts in just 25 days, whilst those aged below 12 months took an average of 32. 

With improving economic trends, such as rising consumer confidence following the Bank of England’s third interest rate cut since August last month, February’s performance provides a reassuring outlook for the coming months. These data points complement our own research which shows that 92% of nearly one thousand surveyed consumers are at least as confident as they were last year in their ability to afford their next car (up from 90% in February 2024), while 75% of those on Auto Trader are still intending to purchase a car in the next six months. 

Pricing confidence builds among retailers

The acceleration in retail prices is much needed due to the recent rise in trade values, which recovered more quickly following the steep decline in autumn 2023. Last month’s slight increase points to greater pricing confidence among retailers, particularly franchised businesses, which our data indicates have increased their average prices by a larger amount than their independent counterparts. This is especially true in their younger stock, where the recent squeeze in supply is being felt most keenly.   

More broadly, we are seeing fewer vehicles enter the retail market below 100% of their value. However, whilst below recent highs, the company’s analysis still shows around 8,500 retailers are advertising circa 56,000 high demand used cars below their market value, resulting in over £21million of potential margin being missed.