Used car prices continue to grow but record trend expected to stabilise

The average price of a second hand car in the UK has continued to grow, reaching in February a record 31.9 per cent year-on-year and like-for-like increase.

Even though it marks the 23rd consecutive record month of growth, the 0.6 per cent raise is the lowest increase registered since April 2021.

According to Auto Trader’s retail price index a slight easing in levels of market growth are expect, even though the slowing down must not be mistaken for a market reverse.

Despite geopolitical and economic headwinds such as skyrocketing inflation rates and the ongoing Ukrainian conflict, consumer demand for second-hand cars remains robust.

The company reported a 19 per cent increase on pre-pandemic levels in the number of enquiries sent to retailers, while the speed at which cars are being sold has decreased from 27 in February 2021 to 11 last month.

“Used car values have been affected by strong levels of consumer demand in the market, combined with the ongoing new and used supply constraints, neither of which show any sign of slowing,” said Auto Trader’s director of data and insights Richard Walker.

“Any suggestion therefore of a bubble bursting is based on pure speculation, and not the data, which clearly points to very high prices remaining for quite some time to come.”

Another sign the bubble is far away from bursting is that around 21 per cent of used cars aged up to 12 months are more expensive of their brand-new equivalent.

Second-hand electric vehicles (EVs) registered a 32.2 per cent growth in price, while the cost of their factory-new counterparts went up only 19.6 per cent year-on-year.

Data from New AutoMotive’s electric car count – the UK’s biggest EV car sales database – revealed that EV sales have more than doubled since February 2021.

EV sales – including both hybrid and pure electric – have gone up from 21 to a 42 per cent stake in the market, while diesel has gone down from 17 to 8 per cent within the space of a year.

“Our latest electric car sales data shows that more consumers than ever are choosing to buy electric cars and EV market share has more than doubled since February 2021,” said New AutoMotive’s head of policy and research Ben Nelmes.

“It’s great to see so many motorists discovering the benefits of electric cars, particularly the savings people can make on fuel at a time of rising petrol and diesel prices.”

According to Nelmes, long waiting lists have become the main barrier to people switching to EVs as people stick with their cars or buy a new petrol or diesel one.

“Manufacturers need to increase the supply of pure electric vehicles to the UK, but they need ministers to adopt an ambitious California-style zero emission vehicle (ZEV) mandate that prioritises and instils confidence in UK-based manufacturing.”

California laws established in 2019 that automotive manufacturers should increase their percentage of EV sold from 4.5 per cent in 2018 to 22 per cent this year.