The like-for-like price of a used car has risen 28.4% in the past 12 months.
According to the Auto Trader Retail Price Index, used car prices have risen for 26 consecutive months on a like-for-like basis.
The RPI is based on Auto Trader’s daily pricing analysis of around 900,000 vehicles. It found that prices in May were 28.4% higher than a year earlier. However, May’s growth is below April’s record 32.2% annual increase and reflects a continued slowing of the pace of price growth with the lowest annual comparison since last October.
But comparisons with 2021 are distorted as Auto Trader’s price data is now overlapping exceptional levels of pent-up demand last May following the end of the third lockdown, when prices were already rising at an annual rate of eight per cent.
While advert views on the marketplace are 12.6% down on the record levels of demand seen post Covid lockdowns in mid-2021, Auto Trader’s figures show audience and activity onsite remains strong compared to pre-Covid levels.
Meanwhile, car usage remains at 97% of pre-Covid levels, despite record fuel prices. Against the backdrop of higher used car prices, retailers are also cutting prices of used vehicles by lower amounts than before the pandemic, which suggests the bubble won’t burst anytime soon.
Richard Walker, Auto Trader’s director of data and insights, said: “It is important not to jump to rash conclusions about the health of the market, despite the softening in used car price growth during May. If we compare it with a boom in car-buying after the end of the third lockdown, it is unsurprising that the market might seem weaker. But judged by site visits to Auto Trader which are currently averaging 63 million a month, demand is still solid and looks likely to support pricing for some time to come.
“This is obviously a tough time for consumers and there are further economic hardships to come. But the supply chain issues triggered by Covid and its aftermath mean that there are around two million fewer cars in the market than would have typically been the case – and the problem has been worsened by the crisis in Ukraine. This is a market which is only going to gradually return to normal.”
