Average used car retail prices have fallen on a year-on-year (YoY) basis for the first time since March 2020, Auto Trader has found.

Auto Trader’s director of data and insight Richard Walker

Its Retail Price Index reveals the average price of a used car was £17,736 in September, down 0.4% year-on-year and 1.2% month-on-month.

The fall comes on the back of 41 months of consecutive growth and is mainly due to the ongoing drop in the value of younger aged vehicles – with Auto Trader adding that overall used car demand remains robust.

Its figures reveal that while the average price of ‘nearly new’ cars (under 12 months old) fell 2.5% YoY in September and those aged 1-3 dropped 6.7%, their older counterparts (which make up a far larger share of the market) recorded high levels of growth. Cars aged 10-15-years-old grew 9.8% YoY, and those over 15 years increased 6.1%.

The fall in values among younger vehicles is due to new car supply shortages easing, which have pushed up the volume of second-hand stock entering the market.

The figures have also been hit by a significant increase in young used electric vehicles entering the market, fuelled by the ongoing de-fleeting of the circa 750,000 EVs sold over the last three years.

In September alone, volumes of EVs under three years old on Auto Trader were up 43.7% on the same period last year, while average value of EVs within this age group were down 19.1% YoY last month, pushing down overall prices in the younger end of the market.

However, second-hand electric prices more broadly are continuing to show signs of stabilising. After 13 consecutive months of falls on a MoM basis, prices were flat in September (£32,142). Although YoY prices fell 22.1% (across all age groups), this is down on the 22.6% rate of decline in August.

The growing stability in used EV prices is due to rocketing consumer demand for second-hand EVs as a result of their increasing affordability.

Auto Trader’s director of data and insight Richard Walker said: “The ongoing de-fleeting of the hundreds of thousands of EVs sold over the last few years, as well as confirmation of the ZEV mandate means the volume of used electric cars entering the used market is only set to increase. Ignore Westminster’s smoke-and-mirrors; EVs are here to stay.”

Latest figures out from Cap HPI also revealed a big fall in used car values for September – which it said was a “realignment” following the extraordinary increases in 2021 – and a slowdown in the fall in values for EVs.

Auto Trader’s director of data and insight Richard Walker said the overall used car market remains in robust health with levels of supply continuing to be outpaced by healthy levels of consumer demand, fuelled by a combination of macro factors, including public transport frustrations, and increasing new drivers entering the market as practical driving tests return to normal levels.

Walker finished up: “The recovery in new car sales has brought a steady increase in supply to the used car market, and with it triggered the first overall price contraction in second-hand prices in over three years. As is always the case with such a volatile used car market, context is key, and it’s critical not to be misled by the headlines. For the vast majority of the market, we’re still seeing robust levels of price growth being stimulated by a combination of strong demand and constrained supply.”