The UK’s used car market fell by 8.3 per cent to 1.8 million in the first quarter of 2020, according to the latest figures released this morning (May 12) by the Society of Motor Manufacturers and Traders.
January and February registered growth of 2.9 per cent and 4.0 per cent respectively, but that was wiped out by a 30.7 per cent fall in March, as the lockdown measures closed retailers. It made it the lowest March on record.
Pre-owned plug-in electric vehicles grew in popularity by 13.6 per cent, with a bumper first two months that saw buyers take advantage of more of the zero- and zero-emission-capable models.
There were also more hybrids changing hands – up 11.5 per cent and taking the number of used alternatively fuelled vehicle (AFV) sales to 36,493.
Petrol and diesel car transactions declined, however, by 9.3 per cent and 7.8 per cent respectively, although together they still made up 97.9 per cent of all used sales in the quarter, namely 1,814,598 cars.
Superminis were still the most popular used buy at 610,859 transactions (33.0 per cent market share) but almost all segments registered a drop in demand, apart from dual purpose, which went up by 2.7 per cent with just over 250,000 of them going to new homes.
Black stayed as the most popular colour (394,177 units), followed by silver/aluminium, blue, grey and white. The only car colour to see a rise in demand was bronze, which went up by 1.6 per cent.
The SMMT said that in spite of the challenging market conditions, the latest data indicated that average used car residuals were holding firm, with March prices staying broadly stable, down only 0.2 per cent year on year at £13,601.
Mike Hawes, SMMT chief executive, said: ‘Encouraging growth for used car sales was wiped out in March as the coronavirus lockdown measures were introduced and, this subdued activity is likely to continue into the second quarter.
‘While it is tricky to predict future demand, the impact of social distancing requirements on public transport means that, for many people, the car will play an even more important role in helping them travel safely to work.
‘Reopening new and used car outlets will support this, enabling more of the latest, cleanest vehicles to filter through to second owners and help support the UK’s green growth agenda.’
Ian Plummer, commercial director at Auto Trader, said: ‘Although the majority of retailers’ businesses have been halted by the UK lockdown, our research indicates that the market is paused, not stopped, as many consumers are eager to buy their next car when they can.
‘Research we conducted recently revealed that 84 per cent weren’t expecting affordability issues, and only two per cent said that they’ve been put off buying a car altogether.
‘There are likely to be new areas of market opportunity too, as more than half of commuters previously using public transport, and who have a driving licence, expect to buy a car for their commute post-lockdown as they seek safety in their own personal space.
‘Therefore, it’s essential that retailers are poised to reopen their doors, with enhanced health and safety measures yes, but also with the right stock at the right price. Crucially, this does not mean slashing prices; maintaining prices in line with market valuations will help the used car industry recover together as one.’
AA Cars chief executive James Fairclough commented: ‘With dealerships across the UK closed from the second half of March, a fall in used car sales across the first quarter was all but inevitable.
‘However, as the government starts to signal the process and stages for opening up businesses again, there are some encouraging signs that latent consumer demand is building and that sales will begin to pick up as soon as the dealerships can reopen.
‘On the AA Cars platform we have seen a 51 per cent increase in car views in May compared to April, and a 46 per cent increase in car finance requests over the same period. We are also starting to see growth in searches for city cars, which might support the hypothesis that people will be swapping public transport for a car for their commute.’
Sue Robinson, director of the National Franchised Dealers’ Association, said: ‘It is positive to see that used plug-in electric vehicles experienced a double-digit growth in the first quarter. Over the next months, demand will likely be driven by the type of cars available in dealerships’ stocks.
‘Used car sales have been key for franchised dealers for quite some time, and businesses are likely to continue to concentrate on this area.
‘In the short and medium term, cars will represent the best alternative for many planning to limit their use of public transport, and the used car sector may benefit from this.’
Karen Hilton, chief commercial officer at heycar, commented: ‘These latest figures come as no surprise as we enter week eight of the national lockdown. Despite this, we are seeing evidence that lockdown is creating a surge in interest among motorists while they are confined to their homes – with more and more browsing online and researching their next vehicle.’
She said they had seen website traffic rise by 50 per cent from March to April, as well as an 18 per cent surge in users submitting leads.
‘If dealerships are indeed able to open from the start of next month as we think at present, then this could be the start of a recovery,’ added Hilton.
‘It’s also encouraging to see that customers are increasingly looking towards EV and hybrid vehicles.
‘As we look further to the future, it’s all to play for in the used car industry for those who have reacted quickly to these changes.’
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