Experts are predicting that the volume of used car sales in the UK will increase by 5% year on year. Auto Trader is estimating that we could see 7.6 million sales, up by 350,000 on 2023. However, it will also see a massive change in supply dynamics. This is something everyone should look at, whether it is buyers, dealers, or people that work in car broking.
What is changing?
The massive change is the dip in supplies of sub five year old vehicles. The forecast is we could have the lowest number of them on the road since 1995. In fact, the belief is there will be 28% fewer cars under five years old in the parc in 2024 than there was in 2019. This is the total number of all vehicles registered in the UK.
What we are seeing is the impact of the covid years. During this period many producers had to stop production. So, they did not deliver anywhere near as many new vehicles as they were planning to. Sales were therefore lower. The result is that stocks of vehicles 1-5 years old are small and will take a long time to recover.
All of this means that more forecourts now have more 5-10 year old vehicles. In 2019, they were 13% of retailer’s stock. Today, they are 22%. Car supermarkets have had an even bigger rise, climbing from around 10% to nearly 30%.
There is also another massive change in the make-up of the second hand market. What we are seeing is gradually more and more used EVs. Auto Trader is estimating that 4% of vehicles in the parc will be electric by the end of 2024. This will keep growing in coming years, with ICE vehicles declining. As a result, the belief is there will never be more used petrol or diesel cars on the market than currently. Instead, supplies will become more and more weighted towards EVs.
Different brands
One thing everyone should note, especially people in car broking, is the dip in supplies of different brands. Some had more disruption to production than others during covid. However, there were manufacturers who had more insulation because they had parts in stock and could resume production sooner. Plus, some are making are bigger jumps to EVs than others.
A trio of massive brands have had the biggest hits to supplies. Vauxhall will record the biggest fall, with the forecast they will have 56% fewer sub five year old cars in the parc by the close of the year. Ford isn’t far behind with 54%. Mercedes then follows with 42%.
Interestingly, MG and Kia will see their supplies increase. In addition, to showcase the growth in the EV market, there will be several times more used Tesla cars.
What to expect?
So, as you can see, the used car market is likely to look very different in the future. The brand landscape will change and we’ll see more EVs and older ICEs. Dealers will need to effectively navigate the change. This could include diversifying their stock. Brokers will have to be aware of the changes too.
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