Used car prices accelerate through May
Used car prices were up more than eight per cent on a like-for-like basis in May, compared to the same month last year.
This is according to the Auto Trader Retail Price Index, which analysed data from about 900,000 vehicles.
It found prices were 8.1% higher in May, which was the 14th consecutive month of price increases and third consecutive month the increase has grown. The last two weeks saw a particularly rapid increase, surging from an average growth of 7.3% mid-way through the month, to 8.1% during the final week.
The growth has been driven by the growing imbalance of supply and demand levels in the market; whilst supply fell 18% on May 2019, consumer demand rocketed 36%.
Another testament to the underlying levels of demand in the market is the increased speed in which retailers are selling cars. Last month, it took an average of just 23 days for new stock to leave forecourts, which is 21% fewer than April (29), and 32% fewer than May 2019 (34).
Director of data and insight, Richard Walker, said: “The significant acceleration in retail prices we’re seeing across the market is unprecedented and shows no signs of slowing. It is critical that retailers are reacting to the speed in which the market is moving, which means ensuring the whole forecourt is adjusted to market price, and not just new stock. On Auto Trader, we’re seeing a significant proportion of older advertised stock which is yet to be repriced to reflect the positive movement of the market, which is not only limiting potential margins, but also dragging down consumer-facing valuations which are based on all advertised vehicles on site.”
Sue Robinson, NFDA chief executive, added: “Demand for used cars is buoyant and this is mirrored by the upward price trajectory we have been seeing for a few months. Retailers remain optimistic as consumer confidence improves and the economy continues to recovery.”
