The latest data from Auto Trader reveals a robust performance in the used car market for May, marked by significant consumer demand, rapid sales, and increased transactions.
Auto Trader’s platform recorded nearly 83 million visits in May, an 11% increase from the same period last year and a 20% rise since May 2022. This surge is attributed to an 8.6% year-on-year growth in consumer demand.
The data also highlights the swift pace of used car sales. On average, used cars sold in just 29 days in May, a day quicker than the same period last year, although slightly slower than April.
Volume brands and cars aged 3-5 years sold even faster, averaging 27 and 26 days respectively. Despite a slight dip from April’s 9% year-on-year increase, used car transactions rose by approximately 6% in May, driven by strong market demand.
Auto Trader’s report indicates that despite these favourable conditions, the market is experiencing a softening in supply. 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, and 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 aiding in the return of retail prices to seasonal norms, with a modest 0.7% month-on-month decrease in average retail prices.
Auto Trader’s Market Health metric, which evaluates market profitability, rose to 11% in May, the highest growth rate since July 2023. Yet, 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, noted 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 said: “Reassuringly consumer confidence is continuing to improve in response to falling inflation and anticipation of further tax cuts, which gives us a very optimistic outlook for the months ahead.”
