8:00 am, August 10, 2022
The brakes have been slammed on the booming used car market after the sector fell by nearly 19 per cent in the second quarter.
A total of 1,759,684 used car sales took place in Q2 2022 – an 18.8 per cent fall – new figures published this morning (Aug 10) by the Society of Motor Manufacturers and Traders (SMMT) reveals.
Some 407,820 fewer vehicles changed hands compared with the same period last year, while Q1 2022 showed a 5.1 per cent growth in used car sales.
The SMMT said the ‘scale of the decline’ is ‘artificially inflated’ when compared with Q2 last year as the easing of Covid restrictions led to the busiest second quarter on record.
However, Q2 2022 was still a hefty 13.5 per cent down on the second quarter of 2019.
SMMT put the decline down to the ongoing squeeze on new car market due to a shortage of semiconductors, and said the knock-on effect was ‘inevitable’.
However, this goes against previous statements that a new car shortage had spurred demand in the used car market to record levels.
Petrols and diesels remained dominant during the quarter and accounted for 95.6 per cent of sales. Pure-electrics rose by 57 per cent to take a one per cent share of the used market, while plug-in hybrids grew by one per cent and hybrids fell by four per cent.
The Ford Fiesta was the most popular second-hand car in Q2, with transactions totalling 71,429, followed by the Vauxhall Corsa (57,306) and Volkswagen Golf (54,268).
Black was the most popular colour for a used car in Q2 while the south-east led the charts with 258,342 transactions, followed by the north-west (191,235) and the West Midlands (177,674).
SMMT chief executive Mike Hawes said: ‘It was inevitable that the squeeze on new car supply would filter through to the used market.
‘Despite this, Britain’s used car buyers clearly have a growing appetite for the latest low- and zero-emission cars, and we need a thriving new car market to feed it.
‘The next prime minister must create the conditions to drive consumer confidence, especially in EVs, and the fleet renewal necessary to meet our decarbonisation goals.’
What the industry says
Used EVs demand will keep on rising
The used car market is thriving right now and will remain this way over the next 12 to 18 months as the chip shortage crisis continues to impact on new car production.
June saw a record number of cars going into Motorway’s daily online sales, almost double the total on sale in January, with daily sales reaching up to 1,000 vehicles a day.
These figures demonstrate a strong supply of used cars going into the market and an equally strong consumer demand to buy them through dealerships.
While EVs are the hottest new cars to buy right now, with lengthy wait times of up to a year, motorists are turning to the used car market to fulfil their electric dreams.
As more drivers look to make that leap to avoid rising fuel costs and any future expansion of clean air zones, demand for used EVs will continue to rise.
Alex Buttle, co-founder, Motorway.co.uk
There’s not enough cars to sell
Given the growing squeeze on consumer finances it’d be tempting to attribute Q2’s weakening used car sales on crumbling levels of demand, but in reality, the market is reeling from a blow in basic economics – there’s simply not enough cars to sell.
In fact, due to the double whammy of forecourt closures and a shortage of micro-chips, nearly two million new cars were ‘lost’ over the course of the pandemic, resulting in a significant shortfall of younger cars re-entering the market for sale.
Despite the economic uncertainty around the rising cost of living, surging fuel prices, and the latest hike in interest rates, for now, our data offers a stable outlook for the used car market. In fact, the lack of availability combined with jam-packed new car order books – and very long waiting times – is keeping used car demand levels buoyant.
Although the rate of growth has softened in recent months, used car prices remain exceptionally strong, with average prices increasing over 40 per cent in just three years.
Ian Plummer, director, Auto Trader
Demand is fizzling out
A fifth fewer new cars rolled off UK production lines in the first six months of the year than did during the same period last year. And with the global production of cars also well below par, many UK dealers simply didn’t have enough new cars to sell during the first two quarters.
As a result, thousands of customers switched to the second-hand market instead – but this surge in demand for used vehicles is fizzling out.
Though the supply problems in the new car market are finally starting to ease, another factor could boost the used market in the coming months – Britain’s rapidly slowing economy.
While the darkening economic situation has dragged down consumer confidence and eroded some people’s willingness to buy big ticket items like cars, there will always be a sizeable number of drivers who want, or need, to replace an ageing car.
For them, the used market – which offers both great choice and better value than brand new cars – is a highly attractive option, and even more so now that more electric vehicles are appearing on the used market.
James Fairclough, CEO, AA Cars
No major price corrections on horizon
Consumer demand for used cars may well drop in the coming months, but the supply landscape is such that it’s unlikely that we see major price corrections in the near term.
Chris Knight, UK automotive partner, KPMG
