Used car sales hit a five-year high as prices drop

• Second-hand car sales grew 6.5% year-on-year in Jan-Apr 2024, SMMT says
• Some 1.9m used motors changed hands – 92% of these were petrols and diesels
• Market data shows that used car prices are currently down 10% on last year 

The used car market increased by 6.5 per cent in the first quarter of the year, with sales of over 1.9 million vehicles, new figures show.

It makes this the strongest start to a year for second-hand motor sales since pre-pandemic 2019, confirmed the Society of Motor Manufacturers and Traders (SMMT).

The used car market has seen 16 months of consecutive growth, which is thanks to new model supplies returning to full delivery capacity, meaning more are starting to filter into second-hand dealers and prices are softening from record high levels seen in the years following the pandemic.

Used car sales grew 6.5% in the opening months of 2024, official figures published by the SMMT show. And while EV transactions are up 71%, more than 9 in 10 second-hand model sales are petrols and diesels

Used electric vehicle transactions are also on the up.

The SMMT’s stats show that between January 1 and April 30 some 41,505 EVs changed hands, which is a 71 per cent increase on the same period in 2023.

Sales of used hybrids (HEVs) and plug-in hybrids (PHEVs) also increased by 49.3 per cent and 42.5 per cent respectively.

However, it is still conventional internal combustion engines (ICE) that dominate, with sales of petrol cars rising 7.7 per cent to 1,130,396 units in the four-month period.

That means petrols alone represent more than half (57.4 per cent) of all used car transactions.

Second-hand diesel sales fell by 1.3 per cent over the four months to 697,718 vehicles.

This is still more than a third (35.5 per cent) of all used car sales, showing that many drivers are still opting for oil burners despite manufacturers culling diesel engines from new models in their showrooms.

It means that ICE cars account for more than nine in ten (92.9 per cent) of all transactions (1,828,114 units) while EVs make up one in every 50 (2.1 per cent) second-hand cars sold in Britain.

The Ford Fiesta – a model discontinued by the US car-making giant last summer – that remains the country’s most commonly bought used motor with just over 80,000 changing hands in the opening quarter of 2024.

Mike Hawes, SMMT chief executive, said: ‘A reinvigorated new car market is delivering more choice and affordability for used car buyers and, increasingly, they are choosing to go electric.

‘To enable even more drivers to enjoy the benefits of zero-emission motoring, ensuring both supply and demand remains robust is essential.

‘Incentivising new EV uptake and investing in a chargepoint network that is accessible, available and affordable to all will drive the nation’s net-zero transition.’

Second-hand car market commentators say used vehicle prices have started to fall back from the record-high levels seen post-pandemic, which was caused by limited production of new models

Used car prices are coming down

With the increased supply of second-hand cars entering the markets comes more competition and therefore falling prices.

This is fantastic news for motorists, who have endured months of record-high used vehicle costs during the post-pandemic period.

Auto Trader, the UK’s biggest second-hand car marketplace, says average used motor prices in April rose marginally by 1.1 per cent during the month but are still 9.3 per cent down on April 2023.

Richard Walker, the company’s data and insights director, said: ‘Even though prices remain down year-on-year, April’s data shows the very robust underlying health of the used car market.’

Richard Peberdy, UK head of automotive for KPMG, says used vehicle stock volumes have been boosted by fleets selling vehicles into the market, having updated their inventory.

‘Consumers are seeing a wider range of vehicle choices than in recent years, albeit still below pre-pandemic volumes.

‘After years of being inflated due to supply disruption, many models are seeing prices falling back as increased stock enters the used market and adjusts the supply and demand curve.’

And while demand for new EV sales are shrinking – according to the latest SMMT registrations data published this week – a used electric car might offer very good value to drivers right now.

Peberdy added: ‘Some of the largest price corrections are being seen in the used electric market – where price normalisation is occurring as the market evolves from its infancy.

‘Despite these price fluctuations causing nervousness amongst some prospective EV buyers, the lower EV prices in the used market, in some instances reaching parity with petrol equivalents, are tempting an increased number of consumers to make the transition to a used rather than new EV.

‘While the overall used market is performing relatively well, caution or inability to spend savings, plus an increased cost of finance and insurance, is still deterring some people from making a car purchase right now.’

Matas Buzelis, from vehicle history checking service carVertical, added: ‘The prices of many used cars have been gradually sliding backwards — no bad thing as far as consumers are concerned, especially when other household costs have increased so significantly.’

James Hosking, managing director at used vehicle marketplace AA Cars, said it had seen stock levels ‘improve substantially’ in recent months, which in turn has ‘helped prices to settle’.

He told us: ‘At a time when household budgets remain stretched, drivers opting for a used car will find they can get very good value.

‘The latest AA Cars Used Car Index showed that the average prices of the UK’s most sought-after used cars fell by 9 per cent during the first three months of 2024 compared to the same period last year.

‘While these price falls represent a relatively gentle reset compared to the big increases seen immediately following the pandemic, prices of EVs and hybrids are falling significantly.’

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