BCA has suggested that retailers’ “safety net” of high used car values could be starting to shift as Russia’s invasion of the Ukraine compound cost of living concerns impacting consumer confidence.
Wholesale used car sold values at BCA’s auctions averaged £10,025 in February 2022, down from January’s £10,120 average, as professional buyers became less enthusiastic about vehicles with cosmetic or mechanical issues and conversion rates came under pressure.
“Unsurprisingly, we haven’t seen the usual seasonal market bounce during the first quarter and – while levels of demand remain steady – these macro-economic issues are definitely influencing consumer behaviour and retail demand.”
High price ‘frustration’
Pearson described the high and rising used car values as the car retail “sector’s safety net”, adding that ongoing supply restrictions might not see a significant change for some time.
But he warned: “At the sharp end of the used car business, BCA Valuations has seen some significant movements at a number of value points and segments during February which are unlikely to be surfaced in the overall ‘headline movement’ that will be reported by the price guides as we move into March.
“We therefore run the risk of the market becoming frustrated in March if buyers are presented with stock that appears to be valued several percentage points above their expectations. This is not an unusual dynamic; however, it is unusual to experience this at this time of year.”
Auto Trader’s Retail Price Index once again detailed rising used car values in February.
A £17,929 average advertised price was 31.9% up year-on-year, marking a 23rd month of consecutive price growth, with one-in-five nearly new cars still priced above their brand-new equivalents.
The 0.6% rise on the 31.3% recorded in January represented the lowest monthly increase since April 2021, however.
Auto Trader claimed that potential headwinds such as growing inflation and the possible impact of the conflict in Ukraine, consumer demand remained robust.
This was reflected in a 12% increase in the volume of enquiries sent to retailers through the Auto Trader platform last month when compared to February 2021, it said.
Auto Trader’s data also suggested the speed in which used cars are selling has also accelerated significantly, with the average car taking 11 days fewer to leave forecourts in February 2022 when compared to the same period last year (27 days vs 38).
Richard Walker, Auto Trader’s director of data and insights, said: “Despite some early indications that the huge acceleration in price growth that we’ve been tracking since the spring of last year is starting to stabilise, no one should be mistaken into thinking this is the start of a fall in prices. Far from it. Used car values have been affected by strong levels of consumer demand in the market, combined with the ongoing new and used supply constraints, neither of which show any sign of slowing.
“Any suggestion therefore of a bubble bursting is based on pure speculation, and not the data, which clearly points to very high prices remaining for quite some time to come.”
Auto Trader said that the number of used petrol and diesel cars has declined by 5.2% and 14.4% year-on-year.
Demand outweighing supply meant that that the like-for-like price for a petrol car (£16,676) increased by 33.6% YoY and the price of a diesel car (£17,680) increased 31.7% last month.
Meanwhile, the average price of a volume brand electric vehicle (EV) increased by 32.2% YoY (£26,220), whilst the average price of a premium brand EV recorded a more conservative 19.6% (£50,653) increase.