As many people who use online car valuation websites will know, used car values have been on the rise during lockdown and the furlough period. It could be that people are now buying cars they really want, as opposed to ones that fit a certain tax band or mpg figure. Small businesses have received 10K in the form a grant, plus some self employed people have also had around £3000.
Many in the public sector have seen their salary remain at 100 percent, no commuting costs plus a cancelled family holiday. Frankly they’ve got about six grand in the bank that they didn’t expect to have, after the last five months of doing very little.
Not everyone is in dire financial straits and actually needs the government’s 10K, so a cash balance of 3K at the bank, where interest rates are under 1 percent isn’t doing much good – why not treat yourself to a different car, or buy a sports or prestige car Sunday only vehicle?
Whatever the reason, demand is strong for low miles, petrol and diesel engined cars. Plus some electric models like Tesla. Here’s the latest data from Autotrader;
Strong growth in average used car prices has continued into August based on data observations from the circa 12,500 retailers currently advertising on the Auto Trader marketplace. On a like-for-like basis, last week (w/c 10th August) saw a 6.2% price increase on the same period last year, which represents 15 weeks of consecutive price growth.
As highlighted in July’s data, this growth is being driven by the strong performance of internal combustion engine (ICE) vehicles, a result of the high demand and lower supply in the market. Last week petrol vehicles saw a like-for-like price increase of 6.9%, whilst diesel prices were up 6.3% year-on-year. It marked consecutive price growth of 24 weeks and 13 weeks respectively.
Supply and demand dynamics impacted low emission cars too, but in reverse to their ICE counterparts, with supply exceeding demand, last week saw the 20th week of price contraction for alternatively fuelled vehicles (AFV), recording an average price fall of -1.2%.
Looking at the average weekly prices within age brackets, those used cars aged 10-15 years have seen the largest growth so far this month, recording a year-on-year increase of 10.3% last week. It was followed by 5-10-year-old cars, which were up 9.1% on the same period last year.
Premium versus volume
In July both premium and volume brands recorded a strong price growth as a result of demand outstripping supply in the market. The latest snapshot of cars available on Auto Trader reveals this performance has continued into August, with the average price of used premium and volume cars increasing 4.3% and 10% respectively.
The price performance recorded in August has been driven, in part, by strong demand, as highlighted by the record number of daily visits to Auto Trader’s marketplace. During the week of 10th – 16th August, there was an average of 2.1 million visits each day across its platforms, which is a 26% increase on the same period last year. Auto Trader’s research support this; out of 58,461 Auto Trader users surveyed in July, nearly a quarter (24%) intended to buy a new or used car within the next three months and 30% within the next six.
This is good news for insurers and specialists like Copart, Synetiq, Charles Trent and many others, who have lightly damaged, but repairable written-off cars in their system. Even humble hatchbacks and city cars are more valuable now by way of auction, than they were just six months ago.
Commenting on the results, Auto Trader’s director of data and insight, Richard Walker, said:
“It’s encouraging to see that over two and a half months after forecourts were permitted to reopen, and with stock levels slowly returning to normal, prices have continued to climb. This is a result of the surge in consumer demand which shows no sign of slowing in August. While the majority of auction houses are yet to open their auction halls, online channels are close to pre-COVID-19 capacity levels, which has seen the supply challenges many retailers faced after lockdown easing in recent weeks.
“We’re hearing concerns over the impact economic uncertainty and the end of the government’s furlough scheme may have on the market. However, based on the exceptionally strong consumer metrics we’re observing on our marketplace, we’re confident that used car sales and prices will remain buoyant in the coming weeks.”
Retailer pricing behaviour
Whilst the number of retailers making price changes and the value of their price adjustments has begun to increase since the end of the lockdown restrictions, they remain lower than pre-COVID-19 levels. Last week, the average number of retailers making daily price changes was 2,000; 17% fewer than the same week last year. The average amount being changed on a daily basis was £274. Under normal trading conditions, reductions average between £250-£550 per day.