The growth in the average price of used cars in the UK has increased fourfold over the past six months, according to Auto Trader. The online used car marketplace says it has seen 76 consecutive weeks of used car price growth, with average prices up by almost a quarter compared with this time last year.
Auto Trader’s research shows the week commencing October 11 saw average used car prices increase by 23.9 percent compared with the same week last year. That’s a fourfold increase on the 5.7-percent growth recorded during the first week after lockdown, which ended on April 12.
The growth has been so dramatic that Auto Trader says 17 percent of nearly new cars available on the market are more expensive than their brand-new equivalents. That’s a big increase on the 11 percent recorded in August and around four times as many as were recorded in January.
In part, Auto Trader puts the price growth down to a “dramatic increase” in consumer demand, with the number of searches on the website between October 11 and 17 rising by 19 percent compared with the same week in 2019. There were also 14.8 million visits to the website that week – an increase of almost a third (32 percent) compared with the same week two years earlier.
The company also says cars are selling faster as customers clamour to buy. Between October 11 and 17, it took an average of 23 days for stock to be sold, which is 17 percent faster than during the week commencing April 12.
Another factor in the price hikes is the continuing reduction in supply. A global shortage of microchips and other raw materials has cut the supply of new cars, and production delays can push customers into used vehicles that can be delivered more quickly.
“With so much attention focussed on inflation right now, there’s huge interest amongst economists on those components that are recording substantial price rises, not least used cars which have been a notable driver of recent UK inflation rates,” said Auto Trader’s design and insights director, Richard Walker. “With levels of used car price growth once again smashing previous records, there is a lot of speculation around how long this boom could last. Whilst inflation in itself does pose a potential risk to consumer demand, we don’t expect to see price growth slow anytime soon.
“This is based on the continued acceleration we’re tracking across the market - fuelled, in part, by increased levels of household savings, a positive sentiment shift towards car ownership, and the 1.5 million ‘lost’ transactions last year - coupled with the ongoing shortage in both new and used car supply.”