Car pricing trends stabilise as we enter 2025

As 2025 begins, the used car market is showing signs of stabilisation, with pricing trends aligning more closely with seasonal norms, according to the latest Auto Trader Retail Price Index (RPI). The December 2024 data, derived from over 800,000 daily pricing observations across the retail market, reveals an average used car price of £16,649, a modest 0.6% month-on-month (MoM) decline.

This trend stands in contrast to the sharper 2.3% MoM drop recorded between November and December 2023, which was attributed to misaligned trade valuations during a traditionally strong period. The more tempered price movement in December 2024 reflects improved market dynamics, offering optimism for the year ahead.

While year-on-year (YoY) prices were down 4.1% in December, this marks the smallest YoY decrease observed in 2024. Encouragingly, YoY price drops have been on a downward trajectory for six consecutive months, peaking at a 10% decline in June 2024.

The price of used petrol cars averaged £14,782 in December, a 3.2% YoY decrease. Diesel vehicles saw a 4.1% YoY decline to £14,087, while electric vehicles (EVs) experienced the steepest drop, down 10.6% YoY to £26,139. These price declines were largely influenced by younger vehicles, although certain cohorts of cars with strong demand but limited supply showed resilience.

Fastest December sales on record

Used cars sold faster in December 2024 compared to previous years, averaging just 33 days to sell, down from 36 days in 2023. This marks the quickest December on record, driven by robust consumer demand that outweighed typical seasonal slowdowns.

EVs led the pack as the fastest-selling fuel type, taking an average of 28 days to sell, with three-to-five-year-old EVs moving even quicker at 24 days. Diesels followed closely at 32 days, and petrol vehicles averaged 33 days.

The strong demand for EVs, paired with increasing supply, is expected to keep the market buoyant in 2025.

Shifts in supply and demand

The growing availability of one-to-three-year-old cars is giving consumers more options as the market adjusts post-pandemic. Retailers are stocking newer vehicles, presenting opportunities for buyers seeking the latest models.

Despite lower demand for internal combustion engine (ICE) vehicles, supply constraints in younger cohorts of petrol and diesel cars are creating potential profit margins for those who can secure these vehicles. Auto Trader highlighted a £30 million profit opportunity in underpriced, high-demand stock compared to average market values.

Positive outlook for 2025

Looking ahead, the used car market is projected to maintain its upward momentum, with sales expected to rise from an estimated 7.61 million in 2024 to around 7.70 million in 2025.

“There’s a trend towards more stable pricing, with year-on-year price drops softening. The data shows there is profit opportunity out there for those who use the right tools and information. To unlock success in 2025, ensure your pricing strategy optimises for speed of turn with margin maximisation as a priority.”

With demand holding steady and pricing strategies aligning with market realities, 2025 is poised to be a promising year for the used car industry.