There has been a significant surge in retailers increasing forecourt prices, as consumer demand accelerates following reopenings on 12 April, according to Auto Trader.
The latest results from the Auto Trader Retail Price Index found that the average price of a used car in April was £14,124; a year-on-year increase of 7.1%. The figures mark the 13th consecutive month of price growth, and the second month that the rate of growth has accelerated, increasing from the 7% and 6.6% recorded in March and February respectively.
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Demand on the Auto Trader platform increased 36% on April 2019, while traffic on the site recorded a similar uplift, reaching a total of 69.3m cross-platform visits. There was also growth in the amount of time consumers spent on the site, averaging 16.5m minutes every day in April, up 30% on 2019.
Of the daily average of 2,316 retailers who adjusted their prices last month, 22% made an overall price increase across all stock on their forecourts. This is up from the 16% who made increases in March and the 15% in February.
Richard Walker, Auto Trader’s director of data and insight, said: “The levels of demand in the market increased significantly last month, resulting in the already very strong price growth accelerating even further.
“Whilst there are some concerns over current trade prices, this exceptional growth should give retailers the confidence to buy knowing the positive trading margins available. It’s more important than ever to adopt a ‘retail back’ approach to pricing because trade valuations simply cannot keep pace with the speed of change and do not truly reflect the live market.
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By GlobalData“Encouragingly, wider economic factors suggest that these high levels of car buying demand are set to continue for some time. If that’s the case, we’ll need to see supply improve substantially from today’s levels before that dents either the price growth we’re tracking or the margin opportunities seen by retailers.”
Electric vehicles have seen a particular spike in consumer demand, with levels increasing from an already significant 132% year-on-year in March 2021 (from 18% in February) to 242% in April, far outstripping the 84% growth in supply levels. As a result of this imbalance in supply and demand, prices increased by 8.2% (£20,364).
The figures follow the news from the SMMT that April saw a 30-fold year-on-year increase in new car registrations, driven by forecourt reopenings on 12 April.
In light of the more upbeat economic outlook on the back of the forecourt reopenings and vaccine rollout in line with the government roadmap, the SMMT has revised its forecasts upwards from 1.83m to around 1.86m new cars to be registered by the end of the year, a 13.9% increase on 2020.
