8:17 am, December 3, 2024
Used car dealers have been warned to expect ‘modest’ market growth over the coming years, with Cox Automotive only forecasting marginal gains between now and 2027.
The automotive giant has today (Dec 3) published its predictions for the next three years with transactions expected to rise from 7.4m in 2024 to just under 7.9m by 2027.
The outfit’s forecasts say that next year is likely to see 7,458,356 used car transactions, a marginal gain of just 0.3% on 2024 levels.
Experts say that current trends show that the used market is unlikely to return to pre-pandemic levels any time soon, largely as a result of economic pressures and ongoing supply limitations.
Philip Nothard, Cox Automotive insight director, said: ‘Demand for used vehicles remains stable, but the UK car parc is contracting, and overall vehicle registrations and transactions continue to fall short of peak levels seen from 2002-2008 and 2014-2019.
‘Our forecast highlights the enduring appeal of used vehicles but also emphasises the reality that this sector, like much of the broader automotive market, faces ongoing pressures as consumer priorities shift and the vehicle landscape continues to adapt.’
Cox’s insiders say that the used car market is likely to evolve significantly over the coming years, thanks to changing production strategies from OEMs and an influx of EVs, registrations of which are expected to grow from 21% to 34% by 2027.
‘Our data suggest economic pressures will continue to influence consumer behaviour,’ Nothard added.
‘While new car prices rise, affordability concerns and a strong demand for lower-cost alternatives are likely to keep used car sales steady.
‘With ongoing supply constraints and a shrinking car parc, we expect vehicle values for certain in-demand segments, particularly ICE, to remain high.’
Used car market approaching ‘critical tipping point’
Cox’s forecasts show that over next three years, the UK’s car parc is expected to decline by around 4.47%.
The firm’s data also suggest a ‘critical tipping point’ for the UK used car market by 2027, with experts saying that the supply chain challenges brought about by the pandemic, which reduced new car registrations by over three million, have ‘permanently affected the composition of the used car parc’.
While UK used car transactions fell 12% between 2020 and 2023 compared to 2016-2019, forecasts suggest a gradual return to pre-pandemic levels by 2027.
Nothard said: ‘The affordability and appeal of used cars will play a central role in the UK’s transition to an electrified future.
‘The market is evolving, but the sector’s resilience is clear. Those in the sector who proactively adjust to shifting consumer preferences and stock needs will be well-positioned to thrive in a transformative market. But it certainly won’t be plain sailing ahead.’
The full forecasts are outlined in Cox Automotive’s Insight Quarterly report for Q4.
