February's used car price fall 'just a blip', says Indicata

A 0.9% reduction in used car prices in February has been branded a “blip” by Indicata.

The data insights business recorded the first used car price drop since March 2021, but attributes it to a settling market, following the Christmas break.

“Although prices have fallen slightly in 2022, we believe this is only a blip as demand remains strong and stock is becoming increasingly scarce. Dealer part exchanges remain restricted and leasing companies continue to extend replacement cycles in the absence of new car supply improving,” said Jon Mitchell (pictured), Inidcata’s group sales director.

“Recent predictions we have seen from Europe say that it may be 2023 before we see new car production back to its pre-semiconductor shortage levels. If that is true used car prices are likely to remain at their current levels for another year,” he added.

Used car values surged by 29% in January, according to data published by Auto Trader.

The online automotive marketplace’s Retail Price Index report said that the average price of a car advertised on its portal reached £20,340 at the start of the month – marking a £4,200 rise in just six months.

Indicata’s data shows January 2022 sales bounced back by 45.3% month-on-month after a seasonal fall during December, but sales were still 0.5% behind January 2021, a period impacted by the Covid pandemic.

January demand remained very strong for used cars but continued to be hampered by stock shortages. The market has experienced a 14% fall in stock in February 2022 compared with February 2021.

Indicata says these statistics reinforce that the stock shortage is progressively getting worse the longer the market is starved of new cars due to the continued global semiconductor shortage.

Dealers have switched their focus to sub-£15,000 models from mainstream brands, this month, following a period of high demand for premium-badged cars.

This follows a period in December and January where stock costing more than £20,000 proved to be taking longer to sell for retailers, according to Aston Barclay.

The remarketing firm’s February used car desirability index sees the VW Polo head the list closely followed by the Suzuki Alto and VW Sharan.