Used car sales hit five-year high as new cars enter the market and prices fall

The used car market grew by 6.5 percent in the first quarter of the year, with sales of more than 1.9 million vehicles, new figures show.

It makes this the strongest start to a year for used car sales since pre-pandemic 2019, the Society of Motor Manufacturers and Traders (SMMT) has confirmed.

The used car market has seen 16 months of consecutive growth, which is due to the supply of new models returning to full delivery capacity, which means that more and more used car dealers are entering the market and prices are falling compared to record highs in the years after the crisis. pandemic.

Transactions with used electric vehicles are also increasing.

The SMMT statistics show that approximately 41,505 electric vehicles changed hands between January 1 and April 30, which is an increase of 71 percent compared to the same period in 2023.

Sales of used hybrids (HEVs) and plug-in hybrids (PHEVs) also increased by 49.3 percent and 42.5 percent respectively.

However, it is still conventional combustion engines (ICE) that dominate, with sales of petrol cars up 7.7 percent to 1,130,396 units in the four-month period.

That means gasoline alone represents more than half (57.4 percent) of all used car transactions.

Sales of used diesel fell by 1.3 percent to 697,718 vehicles in the past four months.

This is still more than a third (35.5 percent) of all used car sales, showing that many motorists are still opting for oil burners, despite manufacturers removing diesel engines from new models in their showrooms.

It means ICE cars account for more than nine in ten (92.9 percent) of all transactions (1,828,114 units), while EVs represent one in 50 (2.1 percent) used cars sold in Britain are sold.

The Ford Fiesta – a model discontinued by the US auto giant last summer – remains the country’s most purchased used car, with just over 80,000 changing hands in the first quarter of 2024.

Mike Hawes, CEO of SMMT, said: ‘A revitalized new car market is offering used car buyers more choice and affordability and they are increasingly choosing to go electric.

‘To enable even more motorists to enjoy the benefits of zero-emission driving, it is essential that both supply and demand remain robust.

‘Encouraging the introduction of new electric cars and investing in a network of charging points that is accessible, available and affordable for all will drive the country’s transition to net zero.’

The prices of used cars are going down

Now that more and more second-hand cars are coming onto the market, there is more competition and therefore falling prices.

This is fantastic news for motorists, who have endured months of record high used vehicle costs during the post-pandemic period.

Auto Trader, Britain’s largest used car marketplace, says average used car prices rose marginally by 1.1 percent in April this month, but are still rising. 9.3 percent lower than April 2023.

Richard Walker, the company’s director of data and insights, said: ‘While prices remain low year on year, April’s data shows the very robust underlying health of the used car market.’

Richard Peberdy, head of UK automotive at KPMG, says used vehicle inventory volumes have increased as fleets sell vehicles into the market after updating their inventory.

“Consumers are seeing a wider range of vehicle choices than in recent years, albeit still below pre-pandemic volumes.

“After years of inflating due to supply disruption, many models are seeing prices fall back as greater inventory enters the used market and the supply and demand curve adjusts.”

And while demand for new EV sales is declining – according to the latest SMMT registration data published this week – a used EV could offer very good value for drivers right now.

Peberdy added: “Some of the largest price corrections are being seen in the used electrical energy market – where price normalization is taking place as the market develops from its infancy.

‘While these price fluctuations are causing nervousness among some potential EV buyers, lower EV prices in the used market, which in some cases are on par with petrol equivalents, are enticing a greater number of consumers to make the switch to a used car. instead of a new EV.

“While the overall second-hand market is performing relatively well, caution or the inability to spend savings, plus higher costs for financing and insurance, are still preventing some people from purchasing a car at this time.”

Matas Buzelis, of vehicle history checking service carVertical, added: ‘The prices of many used cars have gradually deteriorated – not a bad thing for consumers, especially as other household costs have risen so significantly.’

James Hosking, managing director of used vehicle marketplace AA Cars, said inventory levels have “improved significantly” in recent months, which in turn has “helped prices settle.”

He told us: ‘At a time when family budgets are still tight, motorists who opt for a used car will find they get a very good price.

‘The latest AA Cars Used Car Index shows that average prices of Britain’s most sought-after used cars fell by 9 percent in the first three months of 2024 compared to the same period last year.

“While these price drops represent a relatively soft reset compared to the large increases that occurred immediately after the pandemic, prices of electric cars and hybrids are falling significantly.”