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Consumer Confidence Fuels Used Car Market Momentum Into Second Half
The used car market has entered the second half of the year with strong momentum, driven by rising consumer confidence and favourable market conditions. These factors are not only helping cars to sell quickly but also increasing sales and stabilising retail prices.
In June, the average price of a used car was £16,410, reflecting a slight month-on-month decline of -0.5%, which aligns with seasonal trends. This figure represents a -10% drop compared to the same period last year.
Consumer demand for used cars has been robust since the start of the year. In June, Auto Trader reported a 12.4% year-on-year increase in advert views and search activity, marking the highest rate of demand growth in 15 months.
This surge in demand is further highlighted by 80.8 million cross-platform visits to Auto Trader last month, a 10% rise from June 2023 and a significant 21% increase from 2022. Consequently, used cars are selling faster, averaging just 29 days on the market.
The retail market is benefiting from rising consumer confidence, driven by optimism about the economy. With inflation figures falling to their lowest level in almost three years, the GFK Consumer Confidence Index improved for the third consecutive month in June.
Auto Trader’s research found that 50% of car buyers felt more confident in their ability to afford a new car than they did last year, while 89% were at least as confident as they were 12 months ago.
Supply Constraints Affecting Market Dynamics
Despite an initial improvement towards the end of last year, supply levels have slowed over the past quarter. In June, available stock fell by -4.2% year-on-year, marking the largest drop since May 2023.
Cars aged below five years old are facing significant supply constraints due to COVID-19 impacts. Vehicles aged 1-3 years and 3-5 years recorded drops of -20.6% and -16.7% respectively. Conversely, 'nearly new' cars (under 12 months old) saw a supply increase of 42% YoY.
Market Health Metrics
The imbalance between rising demand and falling supply is creating a robust used car market. Auto Trader’s Market Health metric rose to 15% in June from 11% in May, indicating potential market profitability at its highest rate since April 2023.
For stock aged 3-5 years old, this metric increased by 43% YoY, highlighting considerable nuances within the used car market.
Top Used Car Price Changes
{TABLE_X}The table above shows the top ten used cars with price growth and contraction for June 2024 compared to June 2023. Notably, Volkswagen Beetle saw a YoY price increase of 2.3%, while Audi e-tron experienced a significant YoY price drop of -24.7%.
Expert Insights
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 at pace."
"Although this balance of market dynamics is working to return retail prices to seasonal norms," he added, "it’s also affecting retailers’ traditional stock profiles and making finding profitable cars more challenging."
The Auto Trader Retail Price Index (RPI) provides an overview of price and search data from their marketplace monthly. Their team monitors around 800,000 vehicles daily to ensure accurate reflection of live retail markets.
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