Dealers Advised to Maintain Prices with High Used Car Demand

Auto Trader has called on the used car industry to steer clear of unnecessary price adjustments, claiming that the used car market is entering the last quarter of this year in “very robust health.” It’s pretty interesting how they gauge this.

The latest Auto Trader Retail Price Index pulls data from around 800,000 vehicles every day, giving us a clear picture of the current retail prices across the UK. In September, the average prices turned out to be better than what we typically see at this time of year.

This suggests that used cars are moving quickly off the lots, with retailers managing to sell more stock than last year during the same period. It seems that the ongoing demand from consumers, along with supply constraints, is helping keep the market strong.

While Auto Trader mentions that average stock levels dropped by 5.4% in September, demand on their platform has increased for three months in a row, translating to an impressive 8% year-on-year rise.

What’s more, cars were selling much quicker: it took only 27 days on average for cars to be sold off forecourts in September, which is a day quicker than in August and four days faster than the previous year.

Even with some bad press around electric vehicles (EVs), it’s worth noting that Auto Trader’s latest data indicates that 3-5-year-old EVs are actually outperforming the market. They’re selling in just 19 days, pushing average prices up by 1.6% month-on-month. This imbalance of demand and supply means retailers are in a good spot to price their vehicles with more confidence.

Richard Walker, Auto Trader’s data and insights director, explains that even though conditions were similar last year, many retailers adjusted their retail prices based on wholesale market trends, which led to significant margin losses. “While the used car market remains strong, we know it’s getting tougher to maintain those margins,” he says. “I’d strongly urge retailers to heed the retail data so they don’t miss out on profit opportunities.”

However, he emphasises that not all electric vehicles are seeing the same success. The nearly-new EVs, particularly those under a year old, are facing challenges. With brand-new EVs averaging an 11% discount, nearly-new models are taking an average of 43 days to sell—more than double the time it takes for the 3-5-year-old models, and longer than any other segment.

Walker points out that while used EVs are performing well, the market is complex. “Used EVs offer opportunities, but careful analysis is crucial to identify the best-performing stocks for your forecourt. Our insights can help you navigate this promising market.”

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Source and Image: CarDealerMagazine