UK used car prices ‘wont drop anytime soon’ warn experts as values for older models jump in 2023

Used car prices around the UK are still rising and are unlikely to fall in the coming months, industry experts have warned. 

Despite improvements in market supply and the economic pressures facing the country, second-hand values grew for the 40th month in a row in June, according to Auto Trader, with older vehicles showing the most significant shift compared with last year. 

The average used car price is now £17,975, according to the marketplace’s monthly retail price index. That’s up from £17,175 in July last year and more than £400 higher than last month.

Although still climbing year-on-year, the rate of growth in used values has slowed down, offering a glimmer of hope that prices are stabilising. The change from June to July was just 0.3%, while the year-on-year growth slipped from 3.2% in June to 2.8% in July. 

Data from other sources also suggests a levelling out of prices. Auctioneers BCA reported a minor 1% month-on-month change between April and May of this year, with average values of £8,403. And in April AA Cars said that prices in the first quarter of 2023 had remained virtually unchanged from the previous year. 

However, Richard Walker, Auto Trader’s director of data and insight, said anyone expecting an imminent drop in retail prices would be “sorely disappointed” as the trade apparently continues to reap the benefits of two years of market disruption. 

A lack of supply and a surge in demand post-pandemic has seen used values rocket since 2021 and average prices on Auto Trader are now more than £3,000 higher than they were in July of that year.

The latest Auto Trader figures show that older cars have seen particularly strong increases in cost, with the average retail value of a car more than 15 years old hitting £5,805, which is an 8.7% increase on July 2022, and a 2.6% increase on last month, June 2023. Average prices of 10-15-year-old cars - £6,634 - are up less (just 1.4% from June-July 2023) but have increased 11.1% year-on-year. That is on top of the huge 26.5% year-on-year growth recorded in July 2022.

In contrast, the value of newer used models actually fell slightly compared with last year. Secondhand models in the one to three-year age bracket slipped by 2% compared with July 2022, to £27,003. Auto Trader blamed that on the falling values of electric and hybrid models, which it said was offsetting rising prices of pure petrol and diesel cars. 

Walker said that continued high demand and lingering supply issues with second-hand stock were keeping prices high for buyers and sellers. He commented: “Since the start of the year we’ve seen a steady acceleration in retail price growth. Although this has slowed slightly, it’s not an indication of a market in reverse, and anyone anticipating a drop in retail prices anytime soon will be sorely disappointed. 

“Despite the economic headwinds, demand remains buoyant, which combined with the ongoing constraints on new and second-hand car supply, will keep retail values stable.

“Increasing used car prices does have the potential to place added pressure on motorists who are already feeling the squeeze on their household finances. However, most car buyers should be insulated if they have a car to sell or to exchange, as it’s not just the price of the car on retailers’ forecourts that are rising, so too is the car on driveways, and in many instances likely to be worth considerably more than expected.”