SO… JUST WHAT ARE WE TALKING ABOUT HERE?
"CARS…. And lots of them! The latest figures (from 2023) show there being over 32.5 million cars registered in the UK. And they change hands lots of times!"
"Throughout 2023, just over 7.2 million vehicles changed hands in the UK used car market - which equates to nearly 20,000 used vehicles being bought and sold every single day. And that is a lot of cars! This just helps to confirm the potential out there for your Car Broking business!"
And what we’ve seen now that we're into 2024 is that the used car market is going to be stronger still!
WHAT'S MOVING... WHAT'S NOT MOVING...
But what's happening right now... as we come through the first quarter of 2024?
UK vehicle markets back on track
A slew of data out mid February 2024 gives renewed optimism that vehicle markets are getting back on track. The UK’s used car market grew by 5.1% to 7,242,692 transactions in 2023, according to the latest figures published today by the Society of Motor Manufacturers and Traders (SMMT). Four straight quarters of growth saw 351,915 more motorists get behind the wheel of a second hand car than in 2022 as the previous year’s supply constraints receded, delivering more choice to buyers.
Superminis once again proved the most popular used car body type, accounting for one in three (32.1%) sales in the year. They were followed closely by cars in the lower medium segment, which took 26.6% of the market, and dual purpose vehicles (15.2%). The smallest volume segment was luxury saloons, representing just 0.5% of transactions.
To summarise then, the latest figures we have for 2023 (as at February 2024) are as follows...
> UK used car transactions grew 5.1% in 2023, with 7,242,692 changing hands as improving new car market re-energises supply.
> Superminis and black paint most popular used car style choices, taking 32.1% and 21.4% of the market respectively.
> Battery electric car sales almost doubled, up by 90.9% to 118,973 – but at just 1.6% of the market, industry calls for VAT cut on new EVs so future supply can grow to meet second hand demand.
In the UK, new car registrations are rising, but certain supply shortages still continue to hit volumes - which means that people continue to hang on to their cars longer rather than trading up or trading down. This can be seen in the numbers as four times as many used cars are sold than new cars. Meanwhile BEV demand continues to rise.
Overall performance is still driven in many ways by the global supply chain shortages. These continue to hamper new purchases and the fulfilment of existing orders, despite manufacturers’ best efforts to ensure as many new vehicles as possible hit showrooms.
To continue - well, let's start by looking at the facts - and see what's selling according to the latest figures released in February 2024 by the Society of Motor Manufacturers and Traders (SMMT)..
The easing of supply chain disruptions has driven sales growth in every month so far this year and recovery continues apace.
The UK’s used car market grew by 6.9% during the fourth quarter of 2023, with 1,679,116 units changing hands, according to the latest figures published today by the Society of Motor Manufacturers and Traders (SMMT). The increase marks the third successive – and best quarterly – growth of the year, with 98,713 additional transactions compared with the same period in 2022 following a robust increase in supply as the new car market recovers.
Mike Hawes, SMMT Chief Executive, said,
"A healthy new car market is key to driving choice in the used sector and it’s great to see record numbers of second and third owners benefitting from the growing availability of electric vehicles. The demand is there, but to sustain it we must enable every motorist to make the switch. The upcoming Budget is a prime opportunity for government to do just that – halving VAT on new EVs, while making public charging as easy and affordable as plugging in at home, would ensure a faster and fairer transition for all, giving the UK a green economic boost."
Q4 2023 Results - as at February 2024
The latest sales figures for Q4 2023 show that the top selling 'Used Cars' were:
- Ford Fiesta
- Vauxhall Corsa
- Volkswagen Golf
- Ford Focus
- Vauxhall Astra
- BMW 3 Series
- Volkswagen Polo
- Nissan Qashqai
- Audi A3
What remains interesting here is that the top 5 sellers have hardly changed position over the last three years - indeed since 2020/21. The Ford Fiesta still reins supreme. Indeed, over the last 3 years now, the above list has hardly changed at all.
So, what does this tell you? That people's buying habits haven't really changed that much - that's what.
And in the car broking business, it's about knowing what's in demand, what's selling well, and identifying where and what the best opportunities are going to be.
It's called... having your 'finger on the pulse'.
And something else you always need to consider is... colours! What's popular and what's not. Remember when white used to be the 'kiss of death'! Not any more - indeed on SUV's in particular, white is the 'new black'!
Always know what's moving and what isn't. For example, for the whole of 2023, the 10 most popular colours stayed pretty much the same. And guess what? These are the same most popular colours for Q4 2023 as well:
- Silver / Aluminium
- Beige / Buff
Black remained the most popular used car colour for the 12th consecutive quarter, equating to more than a fifth (21.3%) of sales. The top five remain the same as Q3 2023, with grey taking second place and seeing above average gains – growing 9.8% to increase market share to 17.1%. Blue held strong in third place, silver (which once firmly held pole position) was fourth and white placed in fifth.
Now... whilst all of the above doesn’t necessarily reflect what’s moving in the used car sector, it does help to demonstrate patterns of supply and demand – and that’s important when you’re looking to decide what marques you want to broker in – particularly in the volume sector.
The good news for brokers is that the used car market continues to be very resilient - ensuring that there is a constant demand for used quality vehicles, both in the prestige and volume sectors.
If you are running your own business in the used car sector, you need to know what’s moving and what’s not. What are people buying? And most importantly... how this reflects what’s going to be in demand in the used car sector?
A car broker builds and develops their own network, working closely with buyers and dealers and feeds off them. The trade will define what's moving - so that's the demand. It's up to the broker to then provide the supply!
Where do people sell their cars?
Online is the place to be these days. If it's a particularly specialist vehicle, then the seller may also choose to advertise in some specialist magazines. And many people do still advertise in newspapers and various car magazines - so don't ignore these!
The Internet is literally awash with websites advertising cars for sale – and today there are a dozen or so 'Quick Sale' websites offering to take a seller's car off their hands - but for an absolute ‘rock-bottom’ price of course!
Typically though, just because a seller has advertised their car for sale on one or (more likely) several of the many websites around, this doesn't mean that they will find a buyer any quicker, or any more easily come to that. Indeed, the reverse can often be true as their advert gets 'lost' amongst many other or similar cars also being advertised.
What about the 'Electric' revolution?
Ahead of the planned "phase out" of new petrol and diesel car and van sales in 2030 (or 2035 now - depending on who you believe - but wait for the general election in the autumn of 2024), manufacturers have invested billions in new technology, with plug-ins now accounting for one in four of new car models available – with one in 10 powered purely by electricity.
However, what's interesting is that businesses are twice as likely as consumers to make the switch from petrol or diesel.
Why? Well consumer acceptance still remains low because of concerns over affordability, charge point availability and infrastructure reliability. Around one in three households have no dedicated off-street parking, leaving them disproportionately dependent on public charging points – of which around one in 10 are out of order at any given time.
Given present projections suggesting the majority of drivers will choose to charge their vehicle at home if they can, SMMT also estimates that there would need to be around 2.3 million public charge points in service by 2030 to provide adequate coverage and tackle range anxiety – meaning more than 700 new charge points would have to be installed every day until the end of the decade. By comparison, the installation rate is approximately 42 a day presently.
So we have a problem!
As the SMMT have previously said… “Whilst 2022/23’s uptake of electric vehicles is welcomed, it remains clear this has been an electric revolution primarily for business fleets and NOT the general consumer. Manufacturers are committed to the consumer - but to deliver an electric revolution that is affordable, achievable and accessible to all by 2030 - government and other stakeholders MUST put ordinary consumers (and drivers) at the heart of policy and planning.
There will need to be:
> Incentives that tempt consumers,
> A UK wide infrastructure that is robust, and
> Working charging points that provide reassurance.
Only then will the general consumer truly embrace the electric revolution, that combines zero-emission mobility with the opportunities these represent being possible and achievable for everyone, regardless of income or location".
HOW CAN YOU CAN EARN FROM THE £135 BILLION UK CAR MARKET?
It’s simple really. The secret of success in any business can be broken down into 3 straight-forward steps:
- Find a market that NEEDS a certain product or service...
- Give them exactly what they want.. professionally, quickly and efficiently...
- See why these satisfied buyers will pay you good money for providing your services.
This market we're talking about here is dealers in the motor trade. And they will utilise the services of a Car Broker to help them source the vehicles they're looking for, particularly when they cannot find what they need through their other channels of supply.
Equally, if you are able to offer them a really good vehicle that you've identified, and that the dealer knows can be easily 'moved on', then you're potentially in business to negotiate a deal.
As the dealer gets to know you, and realise how you can help them, they will soon start to use you as one of their regular supply channels, whilst also potentially referring you to other dealers. And this just shows how your network can quickly grow!
For you as a broker - it's all about establishing and building your network of contacts across these dealers and there are few markets and business models that are as straightforward to run and make a good income from than Car Broking.
So... what we've provided here is some background information to the car broking business, and why it represents such a great opportunity for you in the months to come…