Used car sales rose for the first time in two years, as a buoyant UK market bounced back following a 2022 hampered by supply issues.
However, concerns have been raised over the volatility of the overall market by industry experts, who predict supply constraints will arise as a result of lower new car production post-Covid – and a cost of living crisis that has slowed private sales.
Figures from the Society of Motor Manufacturers and Traders (SMMT) reveal that the market grew by 351,915 (5.1%) in 2023, with 7.2 million transactions taking place.
Of those, more than 118,000 were electric cars, a rise of 90.9% on 2022, resulting from the bottoming out of prices in the latter stages of the year.
Despite this boom, the immediate worry is demand outstripping supply. “We’ve come out of a Covid period which saw a new car market that was not as big as it would normally be,” Stellantis’s UK sales vice president Eurig Druce told Autocar Business Live’s latest webinar, “so, fundamentally, supply in the used car market over the next two to three years is going to be below where it has been historically.”
Philip Nothard, insight director at Cox Automotive – which produces market forecasts, raised concerns on the supply of ICE models, especially as this is where demand is highest: “As we move to more positive demand and appetite from retailers that begin to stock up again to their normal levels, that product [supply] will start to dry up, particularly in the zero-to-four-year-old products, and particularly in the non-BEV, petrol/diesel product
“So, we’ve got to be very clear that the vehicles that are entering the used vehicle parc in that bracket are getting slimmer and slimmer. There are some scary numbers that you are starting to look at in that marketplace.”
This concern is exacerbated by the market being dominated by ICE car sales: 94.3% of 2022’s total used sales were either petrol (4.1m) or diesel (2.7m) cars.
Additionally, the government’s push to make manufactures sell more electric cars, through the ZEV mandate (OEMs must sell 22% EVs this year), could stifle ICE supply further, said Druce.
However, he added that “those who hit these [required] numbers the quickest will be able to unlock ICE car sales first” therefore sending more combustion-powered models into the used car market.
This high demand for used combustion cars is also down to suppressed demand for electric cars, which made up just 1.6% of total used car sales in 2022 – seen partly as a result of the government’s decision to push back the ICE car ban to 2035.
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