Used car market accelerates as consumers opt for cheap vehicles amid rising bills
The UK’s used car market saw its biggest quarter of growth since 2020 today, as consumers opt for cheap motors amid higher bills and the sector benefits from the knock-on effects of the semi-conductor shortage ease.
The figures, published by the Society of Motor Manufacturers and Traders (SMMT), showed that the UK market for second-hand vehicles rose 4.1 per cent in the first quarter of 2023, following three successive periods of decline.
1,847,149 deals took place, up 72,798 on the same period in 2022.
Today’s announcement comes after years of sky-high prices for used vehicles, caused by demand outstripping supply following the pandemic.
Supply chain issues and the global semi-conductor shortage caused a slowdown in new vehicle production, prompting consumers to hold onto their cars. At the same time, demand for used motors rose, with buyers looking for cheap alternatives amid growing economic uncertainty.
Mike Hawes, chief executive of the SMMT said “easing supply chain challenges have re-energised new car registrations, unlocking availability in the used market and, importantly, delivering more zero emission capable vehicles to second and third owners.”
“Sustaining that growth is vital for our environmental goals, which means bolstering the new car market to drive supply to the used sector. Infrastructure rollout must also improve – and at speed – with affordable and reliable charging essential if more used buyers are to switch to the latest and cleanest available vehicles.”
However, Chris Knight, UK automotive partner for KPMG, told City PM that higher household essential bills and higher borrowing costs,” would also be “key factors behind some consumers deciding to purchase a used car, rather than new.”
He added: “used car values are stabilising after around two years of rapid price increases that were fuelled by demand far-outweighing supply during the pandemic years.”
“Whilst supply of new stock into the market is gradually increasing, demand continues to be ahead of supply for some brands and models.”
He added: “Used car prices remain elevated compared to pre-pandemic, but used electric vehicle prices are falling as more stock enters the market. This is creating more options for those wanting to make the switch to an EV.”