There is “no sign of a significant slowdown” in the growth of used car prices, according to online car marketplace Auto Trader. The organisation says October was the 19th consecutive month of price rises, and there’s no indication those increases will stop any time soon.
According to Auto Trader’s Retail Price Index, which collects data on around 900,000 vehicles every day, prices increased 25.6 percent in October compared with the same period last year. That increase breaks the record set in September, when prices were 21.4 percent higher than they had been 12 months earlier.
The new record means average used car prices have risen dramatically in a matter of months. In May of this year, the average second-hand vehicle was marketed for £13,973, but that has risen to £16,878 in October – an increase of around £3,000 in a mere five months.
Another measure of the market’s strength comes from Auto Trader’s finding that around one in four cars aged up to 12 months (22.2 percent) now cost more than their brand-new equivalents. That’s a big jump compared with the earlier all-time high of 17 percent recorded in September, and a six-fold increase compared with January, when that figure stood at just four percent.
Auto Trader says the growth is being driven by the supply issues impacting the new car market and high levels of consumer demand. And Richard Walker, the organisation’s director of data and insights, said these issues would continue to impact the market into the new year.
“What we’re currently seeing in the market is the result of basic economics – exceptionally strong consumer demand and a constrained supply chain which simply cannot catch up,” he said. “Looking ahead, demand will continue to be fuelled by healthy levels of consumer confidence, a positive shift towards car ownership, and the 1.5 million ‘lost’ car sales in 2020. Add to the fact it’s unlikely we’ll see a strong return on supply levels due to the fall in new car sales volumes over recent years and the lower levels of pre-registration, we can expect strong year-on-year price growth to continue well into next year.
“Although we may see some slight softening as a result of typical seasonal trends, for year-on-year growth to slow to the low single-digit levels we saw pre-pandemic, supply and demand levels will need to even out. From what we’re seeing in the market, the wider economy, and the hundreds of thousands of daily price observations we’re able to track across the live retail market, there’s simply no evidence to suggest that will be anytime soon.”