Used car prices keep rising

The average price of used cars in April was up more than seven per cent on April 2020 according to data from the Auto Trader Retail Price Index.

Based on analysis of about 900,000 vehicle sales, this marks the 13th consecutive month of price growth and the second month the rate of growth has accelerated, increasing from the seven per cent and 6.6% recorded in March and February respectively.

This acceleration has been fuelled by the surging levels of demand in the market, which last month increased 36% on April 2019, boosted by the long-awaited reopening of physical showrooms on 12 April.

Auto Trader’s director of data and insight, Richard Walker, said: “The levels of demand in the market increased significantly last month, resulting in the already very strong price growth accelerating even further. Whilst there are some concerns over current trade prices, this exceptional growth should give retailers confidence to buy knowing the positive trading margins available. It’s more important than ever to adopt a ‘retail back’ approach to pricing, because trade valuations simply cannot keep pace with the speed of change and do not truly reflect the live market.

“Encouragingly, wider economic factors suggest that these high levels of car buying demand are set to continue for some time. If that’s the case, we’ll need to see supply improve substantially from today’s levels before that dents either the price growth we’re tracking, or the margin opportunities seen by retailers.”

Sue Robinson, NFDA chief executive, added: “The repeated increase in average used car prices shows a healthy market which is set to continue to perform well fuelled by pent-up demand as dealerships have now reopened as well as a growing confidence in the economy. These figures are mirrored by retailers’ feedback which indicates strong customer footfall and large volumes of enquiries.”