Used car prices levelling off
The average price of a used car increased by 32.2% year-on-year in April, according to data from the Auto Trader Retail Price Index.
Although it marks the 25th month of consecutive price growth, it does suggest a slowing market, with the rate of growth increasing just a fraction on the 32% rate recorded in March.
However, while the huge growth in used car prices may continue to flatten out over the coming months, there’s certainly no indication in current data that prices are set to tumble. That’s because the same market dynamics that helped fuel the record acceleration in growth are still at play.
In addition to robust levels of consumer demand in the market, supply challenges are set to remain, both due to new car constraints predicted to last until the end of the year at the earliest, and the used car market still seeing suppressed supply as a result of the last two years of lower new car sales.
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.”
