The latest on used car prices
The used car market has begun the new year on firm footing despite concerns around the economy, with cars selling at a record pace, engagement on our platform accelerating to seasonal highs, and retail prices continuing to stabilise.
Our Retail Price Index reveals the average retail price of a used car (£16,774) was flat in January on a month-on-month (MoM) and like-for-like basis; a contrast to the -1.9% recorded in January 2024. And with trade values recently trending above retail, it’s likely prices will strengthen further over the coming months as the market adjusts accordingly.
Stability in retail prices is the result of the ongoing post-COVID squeeze in used car supply (down -3.1% year-on-year in January) coupled with buoyant levels of consumer demand, as reflected in the circa 87.1 million cross-platform visits to Auto Trader last month. That audience level not only marks a whopping 24.8% increase on December (69.7 million), but the highest number of visits in a January ever recorded. It also follows the very strong levels of engagement seen throughout 2024, which totalled circa 978 million visits, a rise of +7% YoY.
The combination of robust demand, and in many cases, the unnecessary under-pricing of stock, is resulting in used cars selling at a record pace. In fact, it took an average of just 38 days for a used car to sell in January, which is three days faster than in January 2024 (41 days). It’s also the fastest start to the year since our records began in 2019.
With such healthy levels of consumer appetite in the market, the rapid turnaround of stock will be at the potential expense of margin opportunity. Indeed, our data shows that circa 61,000 high-demand used cars are currently being priced below their true market value, resulting in over £24 million in potential margin being missed – the equivalent of around £3,000 per retailer.
We are seeing demand translating into sales, albeit after a slow restart following the end of the festive period that combined with a mix of floods and snow disruptions. Sales performance quickly improved over the course of the month though with the final weeks of January recording a strong increase over the same period last year. As a result, overall sales in January were a relatively flat -1% YoY.
This solid performance contrasts with recent uncertainty surrounding the economy, as reflected in the steeper than expected fall in official consumer confidence levels in January [1]. Although there are potential risks around inflation and unemployment this year as the Chancellor’s Budget is implemented from April - as well as growing tariff rhetoric from President Trump - there is cause for optimism for the months ahead, with consumer spending and real incomes forecasted to rise in 2025.
But importantly, despite the more challenging wider economic background, demand and car buying confidence remain largely unaffected, with our data revealing stable levels of consumers’ confidence in affording their next car purchase. Indeed, in a study of 3,700 in-market car buyers searching on Auto Trader (conducted in December), 57% agreed they were ‘much more confident’ or ‘a bit more confident’ in their ability to pay for their next car (35% said ‘about the same’). This is up from 47% 12 months earlier.
What’s more, almost three-quarters of consumers are still looking to purchase a car in the next six months, which is consistent with the same time last year. As such, our 2025 outlook remains positive, predicting the used car market to maintain the strong growth momentum of the last two years and rise from circa 7.61m sales in 2024 to around 7.70m in 2025.