Demand surges despite restrictions
Auto Trader has recorded the largest ever monthly price increase on its marketplace for the second month in a row.
In September, the average retail price of a used car was £13,829, which marks a 7.6% year-on-year increase on a like-for-like basis and six months of consecutive growth. It follows the previous record of 6.1% recorded in August, prior to which the highest rate of growth was 5.8%, observed in July 2014.
The trajectory reflects the exceptionally strong levels of demand in the market, which despite the reintroduction of regional Covid-19 restrictions, continues to grow at record levels. On Auto Trader, there were 63.6 million cross platform visits in September, which represents a 27.5% increase on the same period last year.
In terms of fuel types, like-for-like prices continue to show strong growth for internal combustion engine (ICE) cars, indicating buyers are sticking to the types of vehicle they are familiar with. Last month, as a result of very high demand (21.5%) and falling supply (3.6%), the average price (£12,480) of a used petrol car increased eight per cent.
Diesel recorded a similarly positive performance. However, whilst demand was up by a slightly more conservative 11.4%, levels of supply dropped a significant 19.3%. The large margin contributed to a 7.8% price increase (£14,710), the highest rate of growth for second-hand diesel cars ever recorded on the Retail Price Index.
In contrast to their ICE counterparts, the levels of supply and demand for low emission vehicles are more balanced, with demand (54.8%) for alternatively fuelled vehicles in September marginally outperforming supply (52.3%). Last month the average sticker price of an AFV was £22,795, marking a 1.2% YoY contraction.
Director of data and insight, Richard Walker, said: “With the government reintroducing restrictions in many parts of the country in response to Covid-19, there are concerns of a negative impact on consumer demand. However, we’re not seeing any evidence of that in our metrics, in fact quite the contrary. Not only is demand continuing to surge among key segments, we’re also seeing new pockets of opportunity. Our latest research shows that the proportion of people on our marketplace looking to buy a car to avoid public transport is at its highest level (15%) since we began tracking it in July.
“Used car prices offer an accurate barometer of market health. As we enter quarter four, it’s reassuring that whilst some commentators predicted used car prices would be in steep decline by September, they’re not only stable, but are growing. And although supply constraints are continuing to work their way through, with such strong demand in the market we don’t anticipate any significant reversal in this trend over the coming weeks.”
