June 19, 2024

Strong demand drives robust used car market in May

Auto Trader’s recent data indicates strong performance in the used car market for May, marked by increased consumer demand, rapid sales, and higher transactions.

During May, Auto Trader’s platform recorded nearly 83 million visits, an 11% rise from the same period last year and a 20% increase since May 2022. This growth is attributed to an 8.6% year-on-year increase in consumer demand.

The data also shows the swift pace of used car sales, with used cars selling in just 29 days on average in May, one day quicker than the previous year but slightly slower than April.

Volume brands and cars aged 3-5 years sold even faster, averaging 27 and 26 days respectively. Despite a slight decrease from April, used car transactions saw a 6% increase in May, driven by strong market demand.

Auto Trader’s report indicates a softening in supply despite favorable conditions. After eight months of growth, used car supply fell by 1.1% in April and continued to decline by 2.2% in May, the largest drop since last June.

Stock for cars less than a year old increased by 39% year-on-year, while those over 10 years old rose by nearly 12%. However, supply of 1-5-year-old cars fell by 17.3% year-on-year due to pandemic-related disruptions. This supply-demand dynamic is helping retail prices return to seasonal norms, with a modest 0.7% month-on-month decrease in average retail prices.

Auto Trader’s Market Health metric, which assesses market profitability, rose to 11% in May, the highest growth rate since July 2023. However, many retailers are pricing high-demand stock below market value, potentially eroding margins by approximately £35 million.

Auto Trader‘s Director of Motor Finance, Rachael Jones, highlighted the market’s robustness and anticipated only short-lived disruptions due to upcoming events like the General Election and Euros, with consumer confidence expected to improve further. She stated: “Reassuringly, consumer confidence is continuing to improve in response to falling inflation and anticipation of further tax cuts, giving us a very optimistic outlook for the months ahead.” 

UK records a 1.7% rise in new car registrations in May 2024  

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