Last year was a record for used car sales in the UK, with 8.2 million vehicles sold, up 7.3%* on the year before. Following a buoyant start to this year, industry analysts agree that the signs are good for that record performance to continue in 2017.
Philip Nothard, retail and consumer specialist at Cap HPI, said: “The first three months of the year have grown to dominate the sales cycle. Analysis has shown significant growth. Volumes have risen from 605,198 in 2013 to 771,780 in 2016. This represents a margin of more than 229,489 vehicles against Q4 2016, and we are on track for a bigger result over Q1 2017.”
Analysing the market and consumer buying behaviours is helping, while competitive pricing and increased stock turn could fuel a good result for used cars.
Nothard said: “Pre-reg or tactical registrations will remain and continue to exert pressure on nearly new values. We expect PCH to increase across the board as it continues to prove an attractive option to motorists.”
As expected, the VED taxation changes are providing a boost among new cars as dealers race to either sell or register those vehicles adversely hit by the April 1 changes.
Rupert Pontin, head of valuations at Glass’s said: “We expect to see a number of more expensive £40,000-plus vehicles pre-registered ahead of the VED changes.”
With new car registrations for the first quarter broadly in line with expectations following manufacturers’ focus on Europe after Brexit and the devaluation of sterling, Pontin predicted it would eventually boost the used car market.
He said: “There won’t be an immediate impact on the used car market, it will be felt later in the year. But with fewer new cars in the market, there will be higher retail demand for used. That will be good for the market as it will keep values at a steady level alleviating some of the pressure pre-registrations put on late-plate cars.”
According to Glass’s figures, January saw almost 14% more year-on-year activity at the auctions, although February was down 0.9%.
Pontin believes the market will return to growth, as contract hire and leasing vehicles and returning PCP cars find their way into the market, resulting in some downward pressure on values, which he warns could pose a challenge later in the year.
“We are expecting the UK used car market to enjoy further modest growth from the 8.2m units sold in 2016,” said James Powell, executive vice-president at Sword Apak, the wholesale stock-funding software management specialist.
Continuing low interest rates, used car PCP finance and new car price increases as a result of the drop in the value of the pound, have helped enhance the value proposition of used cars, together with encouraging levels of consumer confidence, record low unemployment levels and wages growth of 2.6%, which outstripped inflation.
Powell said: “Used car supply levels are good, largely being matched by consumer demand, especially in city car, supermini and SUV classifications. This is evident from sales and conversion levels across industry remarketing channels. Despite some mixed reports on values, the overall impact on prices seems to be a neutral one.”
Trade buyers are also selecting stock carefully, focusing on vehicles with a fast turnaround. Simon Henstock, chief operating officer for UK remarketing, BCA, said this was vital as the market is helped by more flexible access to stock and accurate pricing.
“Dealers are now able to trade more flexibly and now source stock seven days a week. The availability of accurate pricing data enables more accurate stocking decisions,” he said.
Similarly, Kee Resources underlined the importance of utilising analysis in a dealer’s used car strategy. Alan Henson, head of sales and customer services, said: “In a market where margins are already fine, small
variations in used car values have implications for purchasing, stock funding and retailing.”