The used car market has shrugged off fears of depressed demand in January, with the month shaping up to be strong for car dealers.
January is proving to be a solid indication that 2023 could be a ‘very good year’ for the industry, with strong levels of demand and buoyant consumer sentiment, along with returning levels of new car supply.
The current average price of a used car on Auto Trader now stands at £18,268 – the highest it’s been since the firm started recording prices in 2011.
Used car prices are also up 2.8 per cent compared to January 2022 and they rose 0.3 per cent in January on December. This is the first used car monthly price increase since October.
Commenting on January activity, Auto Trader commercial director Ian Plummer told Car Dealer, in the video at the top of this story: ‘It’s busy, but good busy.
‘December finished pretty positively for everyone with sales up around six per cent on 2021 levels, and consumer appetite was good in December too with 10 per cent growth on Auto Trader site visits. We’ve taken that momentum into January.
‘Despite the doom and gloom, it’s not as bad as perhaps we allow ourselves to believe; the ONS (Office for National Statistics) said the economy actually grew a tiny bit in November, employment is starting low at 3.7 per cent, and consumer confidence is actually growing.
‘So, it’s all relatively good when you look at the macro numbers going into January.’
Visits to Auto Trader are up 14 percent this January on the same month last year.
Deloitte has reported today that consumer confidence turned a corner at the end of last year after 15 months of decline. The firm said sentiment among consumers rose in the last quarter as they became slightly more positive about the economy.
That news follows Andrew Bailey, the governor of the Bank of England, reporting at the end of last week that the recession ‘won’t be as bad as first feared’.
Plummer explained that on Auto Trader’s platform so far in January, visits are up by 15 percent and proxy sales data has risen from six percent in December to 9.2 percent in the first week of the month.
Consumer confidence, meanwhile, is rising with more consumers quizzed by Auto Trader feeling more likely to purchase a car.
He also said that momentum was likely to continue to flow through the rest of the year.
While dealers, particularly franchised ones, will have to focus on stocking slightly older five-year-old-plus cars, they will be able to ‘sell the cars they’ve got’.
He added: ‘I think it’s still likely to be a relatively good year, not probably maybe as euphoric as maybe the last couple of years has been in terms of record levels of demand and often record levels of profitability, but a very good one, and probably ahead of where we would have been pre-pandemic in terms of both sales numbers, potentially, and notably profit.
‘That’s hopefully going to be fed by a new car market which will likely be up somewhat on last year.
‘We’re expecting something around 1.8m or 1.9m to be sold this year – up on the 1.6m we’ve seen in the last three years consecutively.’
In the Car Dealer Live video posted at the top of this story, Plummer also explained how Auto Trader is supporting its dealer partners in 2023 with three key pillars.
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