Retail Prices Are Rising. Here’s How Dealerships Can Maximise Margins

In February 2025, the average retail price of a used car rose by 0.5% month-on-month to £16,671, marking the first retail price increase in four months. This stabilisation indicates a healthy retail market, suggesting that consumer demand remains robust. The rise in retail prices reflects growing confidence among retailers, especially franchised businesses, which have adjusted their pricing strategies to align with market dynamics.​

👉 Trade values: a rapid recovery
👉 Supply constraints: a common challenge
👉 Consumer demand: driving retail opportunities
👉 Margin opportunities: addressing under-pricing
👉 Strategic considerations for dealerships
👉 Balancing trade and retail for optimal profitability
👉 Unlock more profit with the right finance provider

Trade Values: A Rapid Recovery

Trade values have rebounded quicker than retail prices, recovering more swiftly following the steep decline in autumn 2023. This rapid recovery has led to a narrowing gap between trade and retail prices, prompting dealerships to reassess their pricing and sourcing strategies.

Supply Constraints: A Common Challenge

The used car market continues to grapple with supply constraints, with overall supply falling by 2% year-on-year in February 2025. This shortage affects both trade and retail sectors, intensifying competition for quality stock and influencing pricing dynamics across the board.

Consumer Demand: Driving Retail Opportunities

Despite supply challenges, consumer demand remains robust. Auto Trader reported a 2.8% year-on-year increase in average daily visits to its platform in February 2025, indicating sustained consumer interest in purchasing vehicles. This strong demand has contributed to a 3% uplift in used car transactions during the same period, highlighting the vitality of the retail market.

Margin Opportunities: Addressing Under-Pricing

Auto Trader's analysis reveals that approximately 8,500 retailers are advertising around 56,000 high-demand used cars below their market value, resulting in over £21 million of potential margin being missed. This under-pricing presents an opportunity for dealerships to optimise their pricing strategies, enhance profitability, and capitalise on the strong retail demand.​

Strategic Considerations for Dealerships

Given these insights, where should dealerships focus their efforts in 2025?

Embrace Retail Opportunities

The stabilisation of retail prices and robust consumer demand suggest that the retail sector offers significant profit potential. By aligning pricing strategies with market trends and addressing under-pricing issues, dealerships can enhance margins and meet consumer expectations

Optimise Trade Operations

While trade values have recovered, the competition for quality stock remains fierce due to supply constraints. Dealerships should focus on building strong relationships with suppliers, leveraging data-driven insights to make informed purchasing decisions, and ensuring that trade operations complement retail strategies.

Leverage Digital Platforms

The increase in online consumer engagement underscores the importance of a robust digital presence. Utilising a range of platforms, including online marketplaces like Auto Trader and social media platforms, will help you reach a broader audience, showcase your inventory, enhance consumer trust and drive sales.

Invest In Pricing Intelligence

Addressing the issue of underpricing requires sophisticated pricing tools and market intelligence. Investing in technology that provides real-time market data can empower dealerships to set competitive yet profitable prices, ensuring they capture the full value of their inventory.

Balancing Trade and Retail for Optimal Profitability

In 2025, the interplay between trade and retail sectors presents both challenges and opportunities for dealerships. While trade operations are crucial for sourcing quality stock, the retail sector currently offers substantial profit potential driven by stable prices and strong consumer demand. By adopting a balanced approach that leverages data-driven insights, optimises pricing strategies, and enhances digital engagement, dealerships can navigate the complexities of the market and achieve sustained profitability.​

Unlock More Profit With The Right Finance Partner

Retail prices are stabilising, demand remains strong, and margin opportunities are growing—now is the time to maximise your dealership’s potential. At Marsh Finance, we provide tailored car finance solutions that help you turn stock faster, attract more buyers, and optimise profitability. Partner with us to offer flexible finance options that drive sales and keep you ahead in a competitive market.

📩 Get in touch today to explore how our finance solutions can power your dealership’s success.

Note: All data and insights are sourced from Auto Trader's February 2025 Market Intelligence Report.