Despite a challenging end to the previous year, Auto Trader reports that the used car market is standing on a 'firm footing' as it enters 2024. Their monthly Retail Price Index indicates a 5.6% year-on-year decrease in used car prices in December, averaging at £17,064, slightly lower than November's £17,319. However, there's optimism in the air.

Auto Trader's analysts discovered that consumer demand remained robust throughout December, registering an impressive 11.7% growth compared to December 2022, marking the strongest pace of expansion since July. Overall, used car transactions increased by 4% in the final month of the year, leading to Auto Trader boosting its Market Health metric from 6% in November to a healthier 10.6% in December.

The beginning of January has brought more good news, with site visits up by nearly 4% during the first week of 2024, following over 67 million cross-platform visits in December, a year-on-year increase of 10.2%. Furthermore, used cars continued to sell quickly, averaging just 36 days on the market in December.

It's worth noting that while Auto Trader's findings are promising, other reports suggested that popular used cars had lost significant value in the final months of 2023. Cap HPI also found that used car prices dropped in December but anticipate stabilisation in 2024.

Richard Walker, Auto Trader's director of data and insights, commented on these developments, emphasising the strength of the used car market. He noted that consumer demand remains robust, cars are selling swiftly, and the slow return in supply has helped maintain retail prices better than their trade counterparts. He also cautioned against pricing strategies influenced solely by wholesale trends, which could negatively impact retail values and profits.

Walker highlighted the opportunity for retailers to analyse data on a car-by-car basis and price stock relative to retail valuations. In a year where market dynamics are shifting, he stressed the importance of adopting a meticulous approach to pricing strategies.

In December, used cars older than ten years demonstrated positive price growth, with 10-15-year-old vehicles increasing by 5.3% year-on-year to an average of £6,532, and those aged 15+ rising by 2.5% to £5,516. On the other hand, cars aged 3-5 years old witnessed a decline of 6.1% to £19,639.

Regarding fuel types, the average cost of a used electric vehicle (EV) decreased by 22.7% to £29,718, maintaining the trend of larger price drops than petrol (down 3.8% to £15,482 YoY) and diesel (falling 2.2% to £15,371).

In conclusion, Auto Trader's insights reveal a resilient used car market poised for success in 2024, with strong consumer demand and rapid sales. Despite challenges, the industry shows signs of stability and profitability for retailers who carefully analyse and adapt their pricing strategies.

You can read the original article here on cardealermagazine.co.uk.