Used car prices decline after 41 months of growth

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【Summary】Used car prices fell for the first time in over three years, marking the end of 41 months of growth. The average price of a used car last month was £17,736, a 0.4% dip compared to the same time last year. However, experts do not expect a crash in prices as there is still strong growth in certain segments, particularly older vehicles. The fall in prices is attributed to an increase in supply as more second-hand cars enter the market.

FutureCar Staff Oct 04, 2023 9:16 AM PT

Used car prices decline after 41 months of growth

Used car prices experienced a decline last month, marking the end of a significant 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, representing a 0.4% decrease compared to the same period last year. This contraction is the first in 41 months since March 2020.

Despite this decline, experts at Auto Trader do not anticipate an immediate crash in used car prices. They argue that the figure is concealing strong growth in various segments. In particular, older vehicles between ten and 15 years old saw their values rise by 9.8% year-on-year. The 15+ market also experienced a hike of 6.1%. On the other hand, cars under 12 months old fell by 2.5%, while those aged between one and three years dropped by 6.7%.

The analysts at Auto Trader attribute this trend to the easing of supply constraints, leading to 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 increased the supply in the used car market, resulting in the first overall price contraction in over three years. However, he emphasizes that the market still demonstrates strong levels of price growth due to high demand and limited supply.

Meanwhile, there has been significant attention on used electric vehicle (EV) prices throughout this year. Prices have continuously fallen due to an excess of supply over demand. However, in September, prices stabilized at £32,142, representing a year-on-year decline of 22.1%. Although this decline continues, it indicates a slight slowing in the rate of contraction compared to August's 22.6% decline.

Richard Walker asserts that despite recent challenges and the government's u-turn on the 2030 ban, EVs are here to stay. He urges retailers not to be distracted by political decisions and emphasizes the potential for profit in the used EV market. With prices stabilizing and demand increasing, used electric vehicles are becoming a bright spot in the industry. The ongoing de-fleeting of previously sold EVs, along with the confirmation of the Zero Emission Vehicle mandate, will further increase the volume of used electric cars available in the market.