The average sticker price of a used car grew by 4.6% to £13,888 in July, marking the fourth consecutive month of price growth, according to data from Auto Trader.
The growth is being driven by the strong performance of used internal combustion engine (ICE) vehicles, especially petrol, which last month saw average prices increase 5.6% (£12,604), marking the highest rate of growth since October 2018.
Diesel recorded a similarly strong performance, with average prices increasing 4.1% (£14,705), the highest rate of growth since September 2014.
Prices for used electric vehicles have dropped by 4.3% however, due to increased supply, while alternatively fuelled vehicles (AFV) fared a little better, contracting at a rate of 1.1% (£22,508), marking five months of declining prices.
Richard Walker, Auto Trader’s director of data and insight, said: “Over the last few months, used car prices have benefited from high demand in the market whilst the supply side has emerged more slowly from lockdown. Even when auctions reopened, the supply of new stock in the market has been slow to return to pre-Covid-19 levels, whilst demand has remained at record levels.
“Looking ahead, at a time of economic uncertainty and with so many variables at play, we will continue to be data driven rather than publish opinion-based statements about the future. Whilst consumer demand shows no signs of slowing into August, we have seen that supply constraints are working their way through, so we expect the growth rate we’ve seen in recent month to stabilise somewhat, rather than continue to accelerate each month.”
Taking a more granular view of the market, due to growth in demand outstripping supply, price increases were recorded in every price band of used car. Demand for vehicles aged 10-15 years saw a year-on-year growth of 23% in July, while supply fell by -16%. This resulted in vehicles aged 10-15 years recording the highest price growth among any age group, surging 10.4% (£4,254). In contrast vehicles up to 12 months naturally had the lowest, at 2.6% (£26,500).
In terms of premium and volume brands, both saw demand outstrip supply last month. As a result, both saw an increase in average prices, with premium recording an average growth of 1.8% (£20,779) and volume 9.8% (£9,143).
Sue Robinson, director of the National Franchised Dealers Association, added: “It is encouraging to see sustained growth in used car prices as it demonstrates that, despite the challenging economic circumstances, the public are placing their trust in cars as a means of safe and secure transport. It is interesting to see the greatest increase in value of diesel cars since September 2014.”