Auto Trader diagnoses used car sector’s ‘robust health’ after February value rise

Auto Trader has diagnosed the used car retail sector with “robust health” after reporting a 0.7% rise in the average value of a vehicle during February trading.

The average value of a used car advertised on the car marketplace is up 1.7% year-on-year at £17,880 on a like-for-like basis, according to its data, although the rate of growth is significantly down from the massive 31.9% YoY increase recorded this time last year.

According to Auto Trader the balance of supply and demand continues to drive stable pricing trends as demand remained strong among consumers, with a record 80 million visits to its marketplace during January alone – nearly 10 million more than the prior year. 

Auto Trader’s Director of Data and Insights, Richard Walker, said: “Over the last few months we’ve been seeing and hearing reassuring signs of a used car market in very robust health.

“These metrics, along with wider macro-economic bellwethers, such as January’s softening in inflation rates and the increasing optimism for household finances, adds to our confident outlook for the year ahead.”

Taking a barometer of car buyer demand, Auto Trader’s data showed that used cars are currently leaving retailers’ forecourts in an average of 25 days, which is one day faster than February last 2022 and five days faster than pre-pandemic average.

Retailers remain short of stock, however, with Auto Trader indicating that forecourt volumes are down 11% year-on-year.

Last week Cap HPI director of valuations, Derren Martin, told AM that the average value of a used petrol or diesel vehicle had risen by 1% at three years and 30,000 miles in what was proving to be a “very strong” February.

EV stock surge

And he suggested that, despite a dip of around 6% in electric vehicle (EV) values, retailers would soon be lifting EV stocking bans as the market’s pricing realignment drew to an end.

Auto Trader said the average price of a used EV advertised for sale on its platform was 9.1% down at £34,197 as of mid-February, compared to a 1.4% increase in the average price of a used petrol car (£16,266) or 3.3% for diesel (£16,326).

Premium models (averaging £43,762) are largely to blame, with prices down by 13.1% following the well-documented impact of Tesla's price cuts.

An acceleration in EV stock entering the used car market has also impacted values.

Auto Trader said the volume of used Mercedes-Benz EQA models in the market had increased 823% year-on-year, while there are 918% more MG 5 estates and 958% more Vauxhall Mokka-e crossovers.

Walker said: “What’s happening in used EV prices is a natural consequence of a sudden and sharp increase in supply.

“Consumer demand has been dampened slightly by high energy prices in the last few months, but contrary to what some reports may suggest, consumer appetite for electric has far from fallen off a cliff.

“Availability and affordability have been major drivers in the success of some brands in the new EV market, so this increase in stock and the slight reduction in prices may well encourage more used car buyers to make the switch to electric.”