9:27 am, July 20, 2023
The used car market showed signs of a steady recovery during the first six months of 2023.
That’s according to a wide-ranging analysis by Cox Automotive, which revealed that data captured by its Manheim Auction Services, Dealer Auction and NextGear Capital brands over the first half of the year pointed to a resilient marketplace buoyed by strong demand and improved year-on-year performance..
Consumer demand for used vehicles has continued to grow in line with Cox Automotive’s forecasts, despite new vehicle supplies slowly returning to near-normality.
And while the new market has had a more pronounced return, it’s come from a much lower base.
That, said Car Dealer Live 2024 partner Cox Automotive, is a reminder of the robustness of the used market despite the many external pressures it faces.
Some of the growth comes from the increased supply of de-fleeted vehicles into the marketplace as the lease and rental sector has moved to replenish stock.
Experts at Cox Automotive believe wholesale activity is showing the traits that will define the market.
Comparing the past six months to the same period in pre-pandemic 2019 shows that the average used vehicle entering the wholesale market today is older, carrying more miles, costs more, is selling faster and commanding a stronger margin, they said.
In particular, NextGear Capital data shows the average used vehicle is 23 per cent older (7.5 years in H1/23 vs 6.1 years in H1/19) and carrying 13 per cent more miles (68,671 vs 60,848).
Manheim’s data paints a comparable picture. Its average wholesale sold price of a used vehicle was 33 per cent higher than in H1/19 and three per cent closer to Cap Clean (96.4 per cent vs 93.8 per cent).
Meanwhile, the average retail margin as captured by Dealer Auction has risen by four per cent vs H1/22. (NB: Retail margin data wasn’t captured in 2019.)
Used cars are selling slightly more quickly than they did before the pandemic according to NextGear Capital, at 60.3 days per vehicle in H1/23 vs 61.5 in the first six months of 2019.
Philip Nothard, Cox Automotive’s insight and strategy director, pictured, said: ‘It’s greatly encouraging to see just how consistently the used market has continued to recover over the past six months.
‘This is hugely positive and, what’s more, we are now ahead of pre-pandemic levels.
‘The return of supply in the new market has naturally played an important role, but it’s key to note that growth in new car registrations has not materially tempered the used market.
“The good news is that, overall, the used car market is in a more predictable and reliable state than we’ve seen since the opening months of 2020, and is well positioned to meet consumer demand.
‘It is, however, very likely the average vehicle entering the wholesale market will continue to be older and more expensive than seen before the pandemic.
‘Quite simply, more owners – be they fleet or private – are hanging on to their vehicles for longer, and the changing dynamic of the new car market combined with the economic environment means this will continue to be the case for the foreseeable future.’
He added: ‘As new BEV registrations continue to rise, driven primarily by fleet and leasing strategy, the used BEV market shows signs of stabilisation after the severe adjustments experienced in the first half of 2023.
‘Consumer and retailer confidence in the purchase of used BEVs remains crucial to the success of the transition to an electrified market.’
