Used car market grows 11.5 per cent as exceptional demand fuels record price growth

0
242

New figures show the UK’s second-hand car market has grown 11.5 per cent, with more than 7.5 million transactions registered last year.

According to data from the Society of Motor Manufacturers and Traders (SMMT), 777,997 more cars were sold in 2021 compared to 2020 levels, even though performance remained 5.5 per cent below the pre-pandemic five-year average.

Transactions reached peak levels in the second quarter, with May as the highpoint with 769,782 deals carried out.

SMMT’s chief executive Mike Hawes said:

“It’s good to see the used car market return to growth, even if activity is still below where we were pre-pandemic.

“With the global shortage of semiconductors set to ease later this year, releasing the squeeze on new car supply, we expect more of the latest, cleanest and zero emission models to become available for second owners.

“The demand for personal mobility has undoubtedly increased during the pandemic, so it’s vital we have healthy new car sales to drive fleet renewal and the used car market if we are to improve air quality and address climate change.”

The latest Auto Trader Retail Price Index, which is based on daily pricing analysis of circa 900,000 vehicles, shows soaring levels of demand have spilled into 2022 revealing a strong start to the year for the used car market as average prices reached another record in January.

With an average sticker price of £18,067, it not only marks the 22nd consecutive month of price growth, but a remarkable 31.3% year-on-year increase on a like-for-like basis.

This massive price growth continues to be fuelled by the unusually large gap between the levels of supply and demand in the market.

Highlighting just how strong the used car market is, more than one in five (21%) of the nearly new cars currently available (those aged up to 12 months) are more expensive than their brand-new equivalents.

Nearly half (46%) are priced within 5% of the RRP. The reason for this previously unheard-of phenomenon, is down to the same dynamics affecting the wider used car market i.e. very high demand – in this case from car buyers unable or unwilling to wait for a brand-new car to become available – coupled with very low supply.

Despite this, nearly new cars were leaving forecourts 24% faster in January 2022, than they were in January 2021 (an average of 41 days vs 54).

Commenting on January’s performance, Richard Walker, Auto Trader’s Director of Data and Insights, said: 

“The January blues have done little to take the heat out of the used car market, which has started the year in a very strong position. The ongoing squeeze on new and used car supply, combined with exceptionally strong consumer demand has ensured that the record price growth we saw last year has continued into 2022.

From what we’re tracking there’s little evidence to suggest that these very unusual market dynamics will change significantly any time soon. Simple economics therefore point to a continuation of strong price growth well into the year ahead.”

Looking at January’s price growth on a more granular basis, AutoTrader report volume brands are currently recording the largest year-on-year price increases on vehicles aged below five years old. Prices across all brands rose by least 11% (Aston Martin) last month, but at the top end of the scale, volume brands including Ford (42%), Skoda (41%) and Suzuki (39%) saw almost four times that level of growth.

AutoTrader say the current supply dynamics have resulted in exceptional year on year price growth for both petrol and diesel vehicles, with the former up 32.7% (£16,841) and the latter up 31.4% (£17,876).

Demand for petrol increased by a significant 9.7% year on year, whilst supply decreased by -5.1%. Demand for diesel was flat (0%) year on year, but supply dropped by a massive -14.2% in January.

Meanwhile, prices for both volume and premium electric vehicles (EVs) saw large month-on-month increases.

In January 2022, volume brand EVs increased by 32.2% year on year (£26,502), up from 30.4% growth in December, whilst premium brand EVs continued to catch up the pace, growing at a rate of 17.8% (£50,528), up from 15% the prior month.

AutoTrader state year on year demand saw upward month on month movements for both, albeit only just for premium. Demand for volume EV brands increased a whopping 80.2% year on year (up from 60.4% year on year in December) and a more than respectable 44.2% year on year for premium EV brands (up from 44% year on year).

Sue Robinson, Chief Executive, NFDA commented:

Used car prices remain high as a result of supply constraints adversely affecting the global market. Nevertheless, dealers are optimistic, reinforced by consumers’ growing appetite for Electric Vehicles. Despite challenges, most notably relating to supply, consumer confidence remains robust for the year ahead.”

Top 10 price growth (all fuel types) | January 2022 vs January 2021 like-for-like

RanksMakeModelJan-22 Average Asking PricePrice Change (YoY)
1SEATAlhambra£19,01852.2%
2RenaultGrand Scenic£11,30050.6%
3FordS-Max£15,33350.0%
4SKODAYeti£13,00949.9%
5SKODAOctavia£17,02247.2%
6FordFocus£15,78346.9%
7ToyotaAuris£13,33145.5%
8Land RoverDefender 110£82,17845.4%
9ToyotaYaris£13,87644.4%
10FordGrand C-Max£12,39544.3%

Top 10 price contraction (all fuel types) | January 2022 vs January 2021 like-for-like

RankMakeModelJan-22 Average Asking PricePrice Change
10MazdaCX-30£24,8995.5%
9DS AUTOMOBILESDS 3 CROSSBACK£22,0594.4%
8MINIElectric£28,5334.1%
7SubaruForester£22,9492.5%
6BMW8 Series£58,4492.0%
5Audie-tron£64,0571.8%
4VauxhallCrossland£21,173-1.1%
3BMW8 Series Gran Coupe£60,391-1.7%
2PorscheTaycan£117,863-10.6%
1CUPRAFormentor£35,961-13.8%

Source: NFDA

LEAVE A REPLY

Please enter your comment!
Please enter your name here