June Sees Increased Demand and Stabilized Prices in the Used Car Market
The average price of a used car in June was £16,410, reflecting a -10% year-on-year decrease and a -0.5% month-on-month dip, consistent with seasonal patterns. Consumer confidence is on the rise, propelling a notable 8% increase in June transactions.
Despite recent improvements in supply, stock levels fell by -4.2% year-on-year in June, marking the third consecutive month of declines.
Tuesday, 2nd July 2024, London – The used car market has entered the second half of the year with strong momentum, driven by rising consumer confidence and favorable market conditions. These factors are not only accelerating car sales but also stabilizing retail prices.
According to the latest data from Auto Trader, the average price of a used car in June stood at £16,410. This represents a modest -0.5% decrease on a month-on-month (MoM) and like-for-like basis, aligning with seasonal trends.
Since the beginning of the year, the used car market has shown robust consumer demand, with no signs of slowing down at the halfway mark. In June, the demand on Auto Trader, measured by advert views and search activity, increased by 12.4% year-on-year, the highest rate of demand growth in 15 months.
This underlying demand is further emphasized by the 80.8 million cross-platform visits to Auto Trader last month, a 10% increase from June 2023 and a significant 21% rise from 2022. Additionally, Auto Trader data reveals that used cars are selling in just 29 days, three days faster than the same period last year and five days faster than pre-pandemic 2019 (34 days).
Importantly, this demand is translating into more than just interest from car buyers. Auto Trader’s retail sales data indicates that used car transactions rose by approximately 8% in June 2023, following a robust 6% year-on-year increase in May.
Market Boosted by Confident Economic Outlook
The retail market is benefitting from rising levels of consumer confidence, driven by optimism about the economy. The latest inflation figures have fallen to their lowest level in almost three years, and the GFK Consumer Confidence Index improved for the third consecutive month in June. Auto Trader’s consumer research found that 50% of in-market car buyers were more confident in their ability to afford a new car than they were last year, with 89% at least as confident as they were 12 months ago.
Despite a recent drop in supply, the market remains strong. While the supply of used cars began to improve towards the end of last year, it has slowed over the last quarter, with June experiencing a -4.2% year-on-year decline. This is the largest drop since May 2023. Due to the impact of COVID-19, cars aged below five years are facing the biggest squeeze, with 1-3-year-old cars and 3-5-year-old cars seeing year-on-year drops of -20.6% and -16.7%, respectively. Conversely, nearly new cars (those aged below 12 months) have seen a 42% year-on-year increase in supply, as production levels return to normal.
This imbalance between rising demand and falling supply is creating a robust used car market. Auto Trader’s Market Health metric, which assesses potential market profitability, rose to 15% in June, up from 11% in May, marking the highest rate of growth since April 2023. For stock aged 3-5 years, it’s up 43% year-on-year, highlighting the considerable nuances in the used car market.
Richard Walker, Auto Trader’s Data & Insights Director, commented: “As we enter the second half of the year, our data shows that the fundamentals of the used car market remain solid. Consumer demand is robust, and cars are selling quickly. Combined with the softening in supply, retail prices continue to stabilize. Although this balance of market dynamics is working to return retail prices to seasonal norms, it’s also affecting retailers’ traditional stock profiles and making the job of finding profitable cars all the more challenging. It’s why using insights over instincts to power your forecourt strategy is more important than ever.”
