Friday 20th August 2021, London – According to the latest data from Auto Trader, the exceptionally strong levels of consumer demand in the market is continuing to fuel record price growth.
Based on the circa 400,000 used vehicles currently advertised on its marketplace, the average price of a used car increased a massive 15.2% year-on-year (YoY) on a like-for-like basis last week (as of w/c 9th August 2021). It not only marks 66 weeks of consecutive price growth, but a huge acceleration on what is now a comparatively conservative 5.7% increase recorded during the week of 12th April when physical forecourts reopened.
Highlighting just how high the level of demand currently is, there were over 15.8 million cross platform visits last week to Auto Trader, which was a significant 32% increase on the same week in 2019. There was also an 18% rise in the hours (2.3 million) consumers spent researching their next car on the marketplace. As a result of this increased activity on site, the average number of leads being sent to retailers grew 68% compared to the same period in 2019. This reflects both the strong levels of demand in the market as well as the continuation of online retailing trends, with consumers choosing to make contact before visiting a forecourt. In recent research, 80% of consumers told Auto Trader that they would contact a retailer before turning up on a forecourt, suggesting the days of the ‘walk in’ is over.
Another testament to the underlying levels of demand in the market is the faster speed at which retailers are selling cars. Last week, it took an average of 26 days for stock to leave forecourts, which is a 10% drop on the April average.
New car supply challenges give extra boost to used car demand
The exceptional level of used car demand has been given a further boost by the growing supply constraints seen in the new car market, forcing many would-be brand-new buyers to look for a second-hand alternative. In fact, Auto Trader research conducted this month revealed that whilst nearly half (46%) of new car buyers would not be prepared to wait for more than a month for their preferred vehicle, 74% would be open to purchasing a used car alternative if their brand-new choice wasn’t available within their desired time-frame.
Auto Trader’s new car market forecasts for this year predict a new car market of 1.8 million vehicles, but the underlying consumer confidence and unemployment data suggests the market would be close to 2.4 million if supply challenges were not an issue. This suggests there’s up to circa 600,000 would-be new car buyers that may be looking to the used car market for alternatives.
Commenting, Auto Trader’s Data and Insights Director, Richard Walker, said: “Used car demand is being fuelled by many factors, not least consumer confidence, low unemployment levels, concerns about safety on public transport, but now also the supply constraints we’re seeing in the new car market. We estimate there are up to 600,000 new car transactions that won’t happen this year because of these constraints, with many consumers looking to used car alternatives. This suggests we can expect a sustained period of positive used car demand.”
“Based on the incredibly strong metrics we’re observing across the market we anticipate at least 8 million used car transactions this year. However, this doesn’t even begin to reclaim the sales we saw lost in 2020 due to the lockdowns; if used car supply remains robust, we’re confident there’s enough used car demand in the market to outperform our predictions. Whilst our forecast is in contrast to the comparatively conservative predictions of other commentators, we have been, and will continue to be, led by data rather than opinion. This would be our advice to retailers: know your market and know your data, and you will be in the best possible position to respond, whatever the market context.”
Retailers repricing fewer cars in response to market health
Reflecting the current strength of the market, Auto Trader continues to see fewer retailers adjusting prices on fewer vehicles. An average of 2,054 retailers made daily price adjustments last week, which is circa 383 fewer than the same period in 2019. What’s more, an average of 9,836 vehicles were repriced every day last week, which is 33% fewer when compared to 2019. The data also suggests retailers were making significantly smaller reductions to sticker prices last week, averaging at just -£68, which is 80% less than the average adjustment made in 2019 (-£343).
|Price increase / decrease w/c 9th August 2021|
|Rank||Make||Model||Average Asking Price||Price Change|
|5||Citroen||Grand C4 SpaceTourer||£22,692||31.2%|
|15||Land Rover||Discovery 4||£22,486||24.9%|
|12||BMW||2 Series Gran Coupe||£31,611||-4.3%|
|2||DS AUTOMOBILES||DS 4||£8,655||-7.6%|
|1||DS AUTOMOBILES||DS 3 CROSSBACK||£21,246||-8.7%|
1 It’s now more accurate to compare the current performance against 2019 given the growing impact of COVID-19 this time last year, in this instance 9h – 15th August 2021 versus 12th -18th August 2019