Prices drop after 41 months

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【Summary】Used car prices fell for the first time in 41 months in September, down 0.4% YoY, ending a streak of consecutive growth. However, second-hand electric car prices stabilized after 13 months of contraction. Rocketing consumer demand for used electric vehicles, up 86.7%, is outpacing supply growth (up 56.8%). The director of data and insight at Auto Trader encouraged retailers to focus on the profit potential of used EVs, as the volume of these cars entering the market is set to increase.

FutureCar Staff Oct 05, 2023 6:14 AM PT

According to the Auto Trader Retail Price Index, used car prices experienced a decline in September, marking the first decrease since March 2020. The average price of a used car last month was £17,736, showing a year-on-year and like-for-like decrease of 0.4%. This decline puts an end to an impressive streak of 41 consecutive months of growth in used car prices.

On the other hand, there are signs of stabilization in the prices of second-hand electric vehicles. After 13 months of consecutive contraction, prices remained flat in September at £32,142. This stability can be attributed to the surging consumer demand, which increased by 86.7% last month. It is worth noting that this is the first time since July 2022 that demand has outpaced supply growth, which was up by 56.8%.

Richard Walker, the director of data and insight at Auto Trader, emphasized the growing prominence of used electric vehicles. He urged retailers not to be distracted by the Prime Minister's unexpected U-turn and highlighted the ongoing de-fleeting of previously sold electric vehicles. With the confirmation of the Zero Emission Vehicle (ZEV) mandate, the volume of used electric cars entering the market is expected to increase. Walker emphasized that EVs are here to stay and advised retailers to follow the data, as they offer good profit potential.

Walker also addressed the recovery in new car sales, which has led to an increase in supply in the used car market. This increase in supply has triggered the first overall price contraction in second-hand prices in over three years. However, he emphasized the importance of considering the context and not being misled by headlines. While the overall figures may continue to soften in the coming months, the market remains profitable due to strong demand and limited supply. Walker emphasized that robust levels of price growth can still be observed in the majority of the market.