2022 closes with market momentum as used car prices perform above seasonal expectations
The average price of a used car in December is £18,066 – up 3.4% year-on-year
Despite political turbulence and growing economic uncertainty throughout 2022, used car retail prices remain stable as the market approaches the new year, with current values[1] up 3.4% year-on-year (YoY). According to Auto Trader’s Retail Price Index data, which is based on daily pricing analysis of circa 900,000 vehicles across the market, the current average price of a used car is £18,066
Since reaching a peak in April 2022 (at 32% YoY growth), the rate of price growth has softened over consecutive months. However, second-hand prices remain solid, with the current rate of growth building on the massive 30.5% YoY recorded in December 2021. And by applying a longer-term view, it’s evident just how robust used retail prices are, increasing a whopping 45% on pre-pandemic December 2019 - approximately £2,000 above the level expected under more normal trading conditions.
On a month-on-month (MoM) basis, retail prices – the price advertised to car buyers – have recorded a slight decline between November and December, dipping -0.1% like-for-like. However, this dip is consistent with seasonal trends and a consequence of the market slowing down during the run-up to Christmas. In fact, last year marked the only time since Auto Trader’s records began[2] that average prices have increased during this period. In 2020 prices fell by -0.4% between November and December, -0.2% in 2019, -0.9% in 2018, and -0.5% in 2017 and 2016 respectively, placing 2022 ahead of typical patterns. It’s likely that this seasonal MoM softening will follow previous years and begin to rise in the New Year.
Prices have remained stable despite the economic backdrop due to the ongoing demand and supply dynamics in the market. Although demand is softening against last year’s record highs, overall levels remain relatively robust, fuelled by a number of different factors, not least the backlog (circa 500,000[3]) of people waiting for a driving test, the disruption to public transport (cited by 50%[4] of respondents in Auto Trader research as being a crucial factor to owning a car), and the combined 5 million ‘lost’ new and used car sales since the start of the pandemic. This is reflected in the levels of consumer engagement on Auto Trader’s marketplace, with the current[5] volume of advert views up 7% on the same period in 2019, despite available stock being -12% lower. Indeed, it’s this drop in stock that is the big contributing factor to current price stability; and with no sign of higher levels of supply coming into the market soon, there’s no imminent reason for prices to fall beyond normal seasonal trends.
From a political and economic perspective, 2022 can be defined as one of change and instability. But whilst transactions and demand have softened on the record levels we saw at the beginning of the year, used car prices, and the market more broadly, have remained stable, which means we’re entering the new year with momentum behind us.
“Throughout this year, the market has been driven by the levels of supply, more than demand. We’ve consistently seen on our marketplace, that where there’s stock there’s been strong consumer appetite. With neither a crash in demand or a surge in supply in sight, we believe this dynamic will continue into the new year and will help keep prices stable.”
Top 10 price growth (all fuel types) | December 2022 vs December 2021[6] like-for-like
Top 10 price contraction (all fuel types) | December 2022 vs December 2021 like-for-like
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