Demand on the Auto Trader platform reached record levels in May, pushing the average price of a used car to £13,973, representing a year-on-year increase of 8.1%.
The growth marks the 14th consecutive month of price growth as well as the third consecutive month that the rate of growth has accelerated – increasing from the 7.1%, 7% and 6.6% recorded in April, March and February respectively.
Auto Trader said the growth has been driven by the growing imbalance of supply and demand levels in the market. While supply levels fell 18% on May 2019, consumer demand saw a significant increase of 36%. A record 73m cross-platform visits were recorded on the site in May, surpassing the previous record of 69.3m set in March this year.
Retailers are also selling their cars quicker than before, taking an average of 23 days for new stock to leave forecourts. This is 21% fewer than April (29), and 32% fewer than May 2019 (34). It marks the fastest speed of sale since September 2020 (23).
Fewer retailers adjusting prices on fewer vehicles and on average, with as many retailers are putting prices up as down. Last month an average of 2,205 retailers made daily price adjustments: 111 fewer than in April, and 366 fewer than in May 2021. Additionally, an average of 12,038 vehicles were repriced every day, which is 12% fewer than in April, and 27% fewer than in 2019.
Richard Walker, director of data and insight at Auto Trader, said: “The significant acceleration in retail prices we’re seeing across the market is unprecedented and shows no signs of slowing. It is critical that retailers are reacting to the speed in which the market is moving, which means ensuring the whole forecourt is adjusted to market price, and not just new stock.
“On Auto Trader, we’re seeing a significant proportion of older advertised stock which is yet to be repriced to reflect the positive movement of the market, which is not only limiting potential margins, but also dragging down consumer-facing valuations which are based on all advertised vehicles on site.”
The impact of these supply and demand dynamics are also present at a granular level, with average prices for both used petrol and diesel cars accelerating month-on-month. The average price of a petrol increased from 5.8% year-on-year in April to 6.5% (£12,489) in May, while diesel vehicles increased from an already significant 9.2% year-on-year in April to 10.2% (£14,557) last month.
Used volume electric vehicles (EV) recorded a similar trajectory, with the rate of growth, rising from 8.2% year-on-year in April, to 10.3% (£21,067), which marked the first acceleration in growth since December. For premium EVs however, which saw like-for-like prices contract even further, from -4% year-on-year in April, to -8.7% (£43,525); a result of very strong levels of supply (220.2% year-on-year) in the market outperforming an otherwise very robust level of consumer demand (191.7% year-on-year).
Sue Robinson, NFDA chief executive, added: “Demand for used cars is buoyant and this is mirrored by the upward price trajectory we have been seeing for a few months. Retailers remain optimistic as consumer confidence improves and the economy continues to recover.”