Used car prices continue to rocket as inflation rate reaches record high

As the latest figures reveal inflation hit another record high last month, the average price of a used car on Auto Trader reached an all-time high of £20,340 last week, a 29% like-for-like increase on the same period last year and the 93rd consecutive week of price growth.

Such is the acceleration in used car prices, the average price of a used car on Auto Trader has increased over £4,200 in just six months; up from £16,096 in mid-August, at which point the rate of growth was almost half of what it is today (15% vs 29%).

This acceleration is being fuelled by the ongoing imbalance of supply and demand in the market – the ongoing constraints in new and used car supply, coupled with exceptionally strong levels of consumer demand. This demand is reflected in the huge number of used car enquiries being sent to retailers through the Auto Trader platform, which last week was up nearly a quarter (23%) on the same period last year.

Further evidence of this very strong demand is the faster speed at which retailers are selling cars. Last week it took an average of just 26 days for stock to leave forecourts. Although it’s a slight slow-down on the average 25 days recorded in pre-COVID February 2020, it’s 30% faster than the speed of sale recorded in 2021 (37).

Consumer sentiment survey points to sustained demand

Despite current inflation rates, the latest findings from Auto Trader’s consumer sentiment survey, conducted in January, suggest a minimal impact on buying intentions. Out of circa 4,100 car buyers, 26% intend to purchase within the next three months, whilst 37% intend to do so within two weeks, which is up from 35% in December. What’s more, 32% of those surveyed believe car ownership is more important today than it was pre-COVID, whilst 51% feel more confident in their ability to afford their next car than they did a year ago, which marks the highest figure since June 2021.

Auto Trader’s Data and Insights Director, Richard Walker, commented: “Although inflation will always pose a potential headwind for demand, based on the positive consumer metrics we’re tracking across the retail market, as well as broader economic factors such as the falling unemployment rate and record number of job vacancies, we don’t anticipate any significant easing any time soon. Accordingly, with such strong levels of demand, and no end in sight for the current supply challenges, we can expect the strong year-on-year price growth to continue well into the middle of the year.

“The growth in used car prices does have the potential to place an additional squeeze on consumers already facing the pressure of the rising cost of living. However, it’s worth noting that it’s not just the price of the car on the forecourt that has increased – so too has the car on the driveway. It means for most car buyers, if you have one to sell or to exchange, the higher sticker prices should be relative.”

enewsletter