One in four ‘nearly new’ cars are priced above their brand-new equivalents
As the latest figures reveal inflation eased slightly to 3.1 per cent in September, data from the Auto Trader marketplace shows that the average price of a used car increased 23.9 per cent year-on-year (YoY) on a like-for-like basis last week.
Highlighting just how fast used car prices have accelerated over the last six months, it not only marks the 76th week of consecutive price growth but also a massive fourfold increase on the 5.7 per cent YoY recorded during the week of 12th April when physical forecourts reopened.
The record price growth is continuing to be fuelled, in part, by the dramatic increase in consumer demand, which as highlighted on Auto Trader’s Market Insight tool was up 19 per cent last week, when compared to the same period in 2019.
This growth is reflected in the more than 14.8 million cross platform visits to Auto Trader, which marks a massive 32 per cent increase on the same week two years ago.
Last week, it took an average of just 23 days for stock to leave forecourts, which is 17 per cent faster than the speed of sale recorded during the week of 12th April.
Another factor in the surge in prices is the ongoing drop in levels of supply, which were down 12 per cent last week versus 2019.
The shortage of micro-chips and other raw materials which is directly and dramatically impacting worldwide supply of new cars is having significant knock-on effects on the remarketing supply of used cars.
Such is the massive acceleration in used car prices, over 17 per cent of the nearly new cars available in the market (those aged up to 12 months) are currently more expensive than their brand-new equivalents.
This is a huge jump on the previous all-time high of 11 per cent recorded in August, and over four times as many than in January.
Remarkably, 37 per cent of nearly new cars are currently priced within 5 per cent of their brand-new counterparts, up from 28 per cent in August and 13 per cent at the start of the year.
Commenting, Auto Trader’s Data and Insights Director, Richard Walker, said: “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.
“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.”