‘Huge opportunity’ for retailers as price of used cars surge twice as fast as new
- Average price of used cars increased 42% since 2011, compared to just 19% for new
- Growth fuelled by finance, with newer and more expensive cars entering second-hand market
- Used car finance set to surge as buyers opt for newer used cars, fuelling market growth
3rd October 2018, London – According to the latest research from Auto Trader, the UK’s largest marketplace for new and used cars, the average price of a used car has seen a surge since the start of the decade, driven by the growth of new car finance.
Data taken from the Auto Trader Retail Price Index, revealed that the average price of a used car has grown from £8,997 in 2011, to £12,731 in 2018; a significant 42 per cent increase in just seven years. In contrast, the average price of a new car has grown just 19 per cent during the same period, with the average sticker price increasing from £21,911 to £26,105. On a more recent scale, the average price of a used car has increased 7% over the last year, whilst for a new car, it’s 6%.
The growth in average used prices can be attributed to knock on effects of the dramatic increase in new car finance, which in 2017 accounted for 88% of all new cars bought in the UK, compared to circa 50% of sales a decade previously. With the average two to three-year ownership cycle of a Personal Contract Plan (PCP), there has been a surge in younger, more advanced and, crucially, more valuable, second-hand cars entering the market.
Auto Trader data reveals that these modern second-hand cars are increasing in popularity, helping to drive overall used car sales volumes in recent years. Over the past five years, sales of used cars aged less than three years old have increased by nearly a third (32 per cent), whilst sales of five-year-old and ten year-old-cars have dropped by three per cent and 7 per cent respectively.
Whilst finance currently accounts for circa 40% of the used car market, the growing desirability for more modern and more valuable second-hand cars will be a key factor in driving the number of second-hand vehicles bought on finance, which helps to make these cars more affordable and therefore more accessible to a wider audience. This presents retailers with a huge opportunity to offset declining new car sales.
Ian Plummer, Auto Trader Director, explained: “At a time when new car sales are struggling, these figures represent a very real potential for finance to fuel continued growth in the used car market. The conditions are right and as average prices increase, we’ll see more consumers opt for finance as the best way to access their next car.
“However, with consumers telling us time and time again, that they’re put off by complex language and process, there is a risk many retailers will miss out. Unlocking growth in a market that is more than three times the size of new car will be dependent on making the financing of used cars more competitive, transparent, accessible and easier to understand.”
About the Auto Trader Retail Price Index
The Auto Trader Retail Price Index combines and analyses data from c. 500,000 trade used car listings every day, as well as additional dealer forecourt and website data (OEM, fleet and leasing disposal prices, in addition to pricing data from over 3,000 car dealership websites and data from major auction houses across the UK), ensuring the Index is an accurate reflection of the live retail market.
About Auto Trader
Auto Trader Group plc is the UK and Ireland's largest digital automotive marketplace. Auto Trader sits at the heart of the UK's vehicle buying process and its primary activity is to help vehicle retailers compete effectively on the marketplace in order to sell more vehicles, faster.
Auto Trader listed on the London Stock Exchange in March 2015 and is now a member of the FTSE 250 Index. The marketplace brings together the largest and most engaged consumer audience.
Auto Trader has around 90% prompted brand awareness and attracts circa 55 million monthly cross platform visits each month, with over 70% of visits coming through mobile devices.
The marketplace also has the largest pool of vehicle sellers (listing around 450,000 cars each day). Around 80% of UK automotive retailers advertise on autotrader.co.uk.
For more information, please visit https://plc.autotrader.co.uk
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