The average price of a used car increased 32.2% on a year-on-year (YoY) and like-for-like basis in April.
According to the Auto Trader Retail Price Index, although it marks the 25th month of consecutive YoY price growth, it points to a slowing market, with the rate of growth increasing just a fraction on the 32% YoY recorded in March.
The slight slowdown in price growth is the result of a number of factors, not least the fact that growth is now overlapping last year’s already very strong levels (7.1%). Further contributing factors include a softening in consumer demand, which has been fueled by the rising cost of living, growing consumer concerns around the economy and the prospect of a significant reduction in disposable incomes.
However, while consumer demand has begun to decline, any comparisons made with 2021 will be heavily distorted due to the exceptional and ‘once in a lifetime’ levels the market experienced last year as we exited the third UK COVID lock-down with a high level of pent-up demand.
Auto Trader said that it would be more accurate to compare the current market with pre-pandemic levels, and according to the latest data from Auto Trader, audience and activity on site remains strong, with the volume of advert views on its marketplace increasing 17% on April 2019. Any suggestion therefore that the market is in reverse is incorrect, it said; rather, it is returning to more typical market conditions.
Auto Trader analysis and consumer research also points to the fact that inflation rates are having a smaller impact on the market than some commentators are predicting. Analysis of the data from the last two decades at least shows that inflation has had very little influence on used car transactions, and confidence among ‘in market’ consumers remain strong, with two thirds (66%) of those surveyed in April stating they intended to make a car purchase in the next three months, which is consistent with the last 12 months.
The majority of those consumers who are currently in the market to buy a new or used car said that the rising cost of living wouldn’t impact their timelines (53%) or budget (48%).
Richard Walker, Auto Trader’s Director of Data and Insights, said: “In such a fast-moving market, it’s easy to lose sight of just how exceptional 2021 was for the industry, but context is critical and any suggestion that the used car market is in reverse or prices are set to tumble, is at best an oversimplification, and at worst a misinterpretation of the data.
“While stock limitations have impacted sales, compared to ‘normal’ pre-pandemic conditions, consumer demand, engagement, and prices all remain robust, which in turn is helping to drive strong margins. Our data highlights many segments of the market are perform at varying degrees – it’s vital therefore that during this period of turbulence, retailers look beyond a national average view and adopt a strategy that is led by data to identify and to focus on those areas where they can win.”