Used car market declines as consumers delay purchases
“The decline of -2.8 per cent in used car transactions in the second quarter of 2019 was anticipated due to a number of factors that affected the sector over the past months, but the market remains at high levels”, said Sue Robinson, Director of the National Franchised Dealers Association (NFDA) which represents franchised car and commercial vehicle retailers in the UK commenting on the latest SMMT used car figures.
The used car market saw a decline of -2.8 per cent in the second quarter of 2019, with a total of 2,034,236 used car transactions. Demand for hybrid, plug-in hybrid and pure electric cars grew substantially by 24.8 per cent, with 33,492 models, in particular, pure electrics rose by 32.8 per cent. Petrol declined by -3.7 per cent and diesel -2.5 per cent.
Robinson continued, “Franchised retailers continue to see strong interest in used cars, however, a large proportion of motorists are keeping their current vehicles partly due to the uncertainty caused by new emission policies and the transition to low emission vehicles.
“The recent declines in new car sales, combined with fewer companies defleeting, have had a detrimental effect on the availability of part exchange vehicles. Going forward, dealers’ stock availability is expected to improve as more two and three year old second-hand cars return to dealerships.
“It is important to note that we are comparing this year’s results with an extremely robust market in 2018. Used and nearly new cars continue to be an important business area for franchised retailers”.
The NAMA perspective
“NAMA is pleased to see that the overall used car market has continued to remain strong in Q2 with the market down just -2.8 per cent”, said Louise Wallis, Head of The National Association of Motor Auctions (NAMA) commenting on the SMMT’s used car figures.
There were just over 2 million used transactions in Q2, with March being the busiest month in terms of volume so far this year.
Growth in the market came through sales of hybrid, plug-in hybrid and battery electric cars (BEVs). Earlier this year NAMA reported that we expect to see more plug-in hybrids and BEVs going through auctions in 2019, increasing supply and starting to normalise their price behaviour.
Wallis continued, “The auction market appears to be performing well and there has been a reduction in stock coming into remarketing centres which has had a positive impact on both values and conversion rates.
“The supply of used cars has been affected by less part-exchange and de-fleeted vehicles due to a lower volume of new car registrations. Dealers are still requiring good quality and well-priced stock to supply their forecourts and to fulfil consumer buying requirements.
“This trend is expected to continue through August ahead of the plate change at the start of September when volumes will start to increase from dealer part-exchange vehicles. We look forward to seeing what the third quarter brings.”