Demand outstripping supply in used car market

The used car market recorded a healthy uptick in demand and sales during February, according to data from Auto Trader.

It reported that demand was up eight per cent in February compared to the same month in 2023, with used cars selling in just 27 days on average compared to 40 days in January.

Supply levels also rose, up by a marginal 2.8%, fuelled almost exclusively by a 15.5% increase in models over five years old. By contrast, supply of models in the one to five-year bracket was down by 13.7%.

However, with demand outstripping supply, Auto Trader has identified substantial under-pricing of high demand stock. It found that average retail prices were down 8.3% year-on-year, marking the sixth straight month of decline, with up to 41,000 cars listed below their market value.

Richard Walker, Auto Trader’s data & insight director, said: “February was another positive month for the used car market – demand was strong, stock sold quickly, and more cars were sold than last year. It’s disappointing therefore that retail prices were below where we would expect them to be given the otherwise very robust market health. Wholesale values are improving, and the number of vehicles being underpriced is falling, but still too many retailers are being guided by trade rather than retail, and the result is an unnecessary erosion of margin.

“To maximise the full potential currently available in the market, I’d strongly urge retailers to utilise our valuations data, which is based on the largest single view of the retail market and available to all our partners.”