What is going on with the UK’s used car market?

Whilst most areas of the economy are suffering, the used car market is buoyant

The second quarter sales of used cars in the UK is down 48.9% – almost half compared to last year with only 1m cars sold – this is according to SMMT (Society of Motor Manufacturers and Traders). Having said that the overall decline for the year is 28.7% – that’s 2.9m sold compared to about 4m by this time last year.

All the losses were in the second quarter. And mostly in April – there was a 74.2% decline. But that reduced quickly to just 17.5% in June as people started buying again. This was confirmed by Ian Plummer, Commercial Director of AutoTrader who stated that in June itrecorded 64 million visits and in July a record of 64.4 million, which was 22.7% up on the year before. Sales leads surged by 67%.

Back to SMMT figures and Electric car sales do not exactly appear to be taking off – they grew 45% in the first quarter but dropped by nearly 30% in the second. So it seems in this strange and uncertain new world, people are maybe falling back on what they know, rather than trying something different.  – that’s reflected in the top selling cars which I reveal below.

In terms of the types of cars people are buying, supermini sales fell 52.4% – though they are still the most important segment and did still account for nearly a third of the market. Interestingly however, luxury saloons declined by only 30% in comparison – hold that thought I’ll come back to this.

Meanwhile for colours, black remained the most popular colour, followed by silver, blue, grey and white – come on people – we need a bit of colour in our lives now! It helps to lift the national mood – there’s statistical evidence that proves it. Of course that’s all dependent on new car sales and I’ll touch on those in abit, but if you’re ordering a new car – choose a bright fun colour please!

The Top 10 used cars sold in Q2 were:

1. Ford Fiesta
2. Volkswagen Golf
3. Ford Focus
4. Vauxhall Corsa
5. Vauxhall Astra
6. BMW 3 series
7. Mini
8. Volkswagen Polo
9. Audi A3
10. Mercedes C Class

Just to underline how used car sales have grown post-lockdown, a press release from online car supermarket BuyACar.co.uk claimed it had the biggest sales month in their entire 18-year history , and that was in July.

They’ve also revealed that the most interest is in four-year old cars and that average prices for used cars are going up.They claim the prices are being pushed up due to sales of higher end and sports cars – remember I said hold that thought.

BuyACar.co.uk said: “in the first 10 days of August cars such as the sporty Nissan 370Z and Abarth 124 Spider convertible were snapped up alongside consistently popular ‘bread and butter’ models such as Mercedes A Class, Vauxhall Corsa and Volkswagen Polo. BuyaCar.co.uk even delivered a £51,280 Mercedes E Class in August.”

They reckon this is partly caused by more motorists splashing out on a more exciting car than they might previously have chosen – now this is interesting. In my previous predictions I got this partly right and partly wrong. In fact in my previous video, about what sort of car people might want post-lockdown, I did say that while people do want personal transport, we still want to express our identity and style – but we’re not dead yet as a I stated.

However I’ve also said previously that higher end cars in the new and used market would see interest drop, because people have been stung by the economic crash and want to be careful with their money.

Higher-end new and nearly new cars, tend to lose value more rapidly. But it appears that canny buyers picking up four-plus year-old higher end cars are getting themselves something cool, but saving on most of the initial depreciation – which mostly happens in the first three years. Even so it will cost them a little more in running costs and insurance.

As Christopher Lloyd, Editor of BuyACar.co.uk points out: “It may be that some of the money drivers inevitably saved during lockdown, when much leisure spending was curtailed, is going into more entertaining cars instead.”

All of this is also confirmed by the trade. The latest Cox Automotive sentiment survey reveals that dealers are experiencing a buoyant market overall since lockdown restrictions lifted and are optimistic that demand will continue: “Many retailers are reporting that they are pleasantly surprised with the market’s performance and are experiencing similar demand for both new and used cars to that seen pre-pandemic.”

The mention of new cars there is interesting. Because the new car market seemed to be taking longer to recover. But if people can’t find what they want used, perhaps they are being tempted by special offers and lower interest rates to splurge on a brand-new car?

The biggest concern for used car dealers is finding quality used stock, and they will be hoping to see decent new car sales and hence plenty of trade-ins to help replenish their stocks in September.

All this is happening because it’s pretty clear that increased traffic and reduced use of public transport indicates that people are still wary of the coronavirus and would prefer travel in their own personal car – hence increasing the sales of more affordable used cars

I do find the surge in luxury and sports cars more interesting. And it does offer hope for something else I said way back during lockdown – that the backlash against cars might subside a little, and we could more people, younger people, getting back into cars. Which from my point of view is great news!

I guess one of the things that the pandemic has taught us is that there are no guarantees in life, and maybe people are thinking – hey let’s get a cool car and enjoy it whilst we still can. Let me know what you think in the comments below.