Car prices decline after 41 months of continuous growth

author: FutureCar Staff    

Used car prices experienced a decline last month, marking the end of a remarkable period for the motor trade. According to Auto Trader's Retail Price Index, the average price of a used car in September was £17,736, which is a 0.4% decrease compared to the same time last year. This contraction in prices is the first in 41 months. However, experts at Auto Trader do not anticipate a sudden crash in used car prices and argue that this figure is concealing strong growth in various segments of the market.

Last month, older vehicles saw a significant increase in their values. Cars between ten and 15 years old experienced a growth of 9.8% year-on-year, while the 15+ market observed a hike of 6.1%. On the other hand, cars under 12 months old witnessed a decrease of 2.5%, and vehicles aged between one and three years old dropped by 6.7%. Auto Trader's analysts attribute this trend to the easing of supply constraints, which has resulted in more second-hand cars entering the market.

Richard Walker, Auto Trader's director of data and insight, explains that the recovery in new car sales has led to an increase in supply in the used car market, thus triggering the first overall price contraction in over three years. However, he emphasizes the importance of considering the context and not being misled by the headlines. Despite the softening of overall figures in the coming months, the market continues to experience robust levels of price growth due to strong demand and limited supply.

In recent months, used electric vehicle (EV) prices have been in the spotlight as they consistently declined. However, in September, prices reached a plateau at £32,142. Although this still represents a year-on-year drop of 22.1%, it indicates a slight slowing in the rate of contraction compared to August's decline of 22.6%. Richard Walker suggests that despite the challenges and the government's u-turn on the 2030 ban, EVs are here to stay. As prices stabilize and demand continues to rise, used electric vehicles present a promising opportunity for retailers. The ongoing de-fleeting of previously sold EVs and the confirmation of the ZEV mandate will further increase the volume of used electric cars entering the market.

Walker advises retailers to not be distracted by political decisions and emphasizes that EVs have long-term profitability potential. He urges them to focus on the data rather than the smoke-and-mirrors of Westminster.

FutureCar Staff