The UK used car market grew 108.6% in the second quarter of 2021, marking the best Q2 performance ever for the market.
This is according to the latest figures released by the Society of Motor Manufacturers and Traders (SMMT), which revealed that 2,167,504 vehicles changed hands, up 6.6% on 2019 pre-pandemic levels.
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Mike Hawes, SMMT chief executive, said: “This is welcome news for the used car market as transactions rebounded following nationwide lockdowns which closed retailers. More motorists are turning to used cars as supply shortages continue to affect the new car market, and the increased need for personal mobility with people remaining wary of public transport as they return to work.”
The increase coincides with the end of lockdown, as businesses reopened and consumers were able to enter showrooms again. The used car market also grew as a result of supply issues affecting stock in the new car market.
April was the month that saw the biggest growth from last year, with used car transactions up by 307.4% on 2020, and up 5% on pre-pandemic 2019. May and June up were 9.9% and 4.6% on 2019 respectively, the best performance for both months on record.
Year to date, the rebound in Q2 has pushed the used car market up 33.3% to 3,855,259 units over the first half of the year. However, this remains -4.9% or almost 200,000 units off the 2019 market.
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By GlobalDataDemand for used battery electric (BEV) and plug-in hybrid (PHEV) vehicles continued to grow, helped by increased supply flowing through from higher new car sales and wider product choice. Plug-in vehicles now make up 1.3% of the used car market, and both BEV and PHEV transactions more than tripled.
Petrol and diesel powertrains made up 96.4% of the quarter’s used car market. In addition, increased demand overall led to an increase in sales of older used cars with only 12.7% of all vehicles sold being three years or under, the lowest on record.
All segments of the market saw growth, with dual-purpose vehicles seeing the biggest increase, up 147.7%, pushing their market share to 13.5%, which is still just behind the market share of superminis (31.9%) and lower medium (27%).
Hawes concluded: “A buoyant used car market is necessary to maintain strong residual values which, in turn, supports new car transactions. We now need to see a similar rebound in new car sales to accelerate the fleet renewal necessary to deliver immediate and continuous improvements in air quality and carbon emissions.”
Industry reaction
Seán Kemple, managing director of Close Brothers Motor Finance, said: “It’s an extraordinary time for the used car market. Because of the supply challenges hitting the new car market, thanks to a global semiconductor shortage and the repercussions of restricted manufacturing during the pandemic, buyer demand is being channelled toward second-hand vehicles instead.
“This, in turn, has caused prices to artificially inflate. We are seeing reports of used cars being sold for well over their recommended retail price, and in some cases, for significantly more than their brand-new counterparts. For buyers eager to get their hands on a new vehicle, they either face waiting times of up to 12 months for a brand-new model – or they can look to the second-hand market for a slightly different model to drive home sooner; but at a cost.”
James Fairclough, chief executive of AA Cars, said: “This huge interest in used cars meant enquiries generated to our dealers from the AA Cars site were incredibly strong compared to the first quarter of the year.
“Sales may be further aided by low interest rates, which makes this a good time to take out a car finance deal or unsecured loan, and we have seen car finance applications remain strong.
“This bumper quarter is exactly what dealers needed after months of lockdown, as although many dealerships embraced click and collect and delivery to get cars to customers through the pandemic, we know that many drivers still favour visiting a forecourt and are feeling much more confident about doing so thanks to the vaccine roll-out.”
Ian Plummer, commercial director at Auto Trader, said: ““With none of these consumer or economic factors showing any sign of easing, we’ve revised our 2021 forecast. We predict circa eight million used cars will be sold this year, which is considerably more robust than those made by other commentators, but we believe more accurately reflect the exceptional health of the market.
“Q2’s performance is also testament to the success retailers have made in responding to the growth in online retailing trends, adapting their businesses to provide a blended retail experience; one that caters to those consumers wishing to conduct as much as the journey online as possible, but who also value the opportunity to feel and get a sense of the vehicle before committing to purchase.”
Karen Hilton, chief commercial officer at heycar, said: “These are unprecedented times for the motoring industry, when there is ‘gold on the driveway’ for car owners. In June, the Office for National Statistics put the level of car inflation at 4.4% and it’s not slowing down.
“So it’s no surprise that more people are keen to cash in on this spell of increased buying power. At heycar, we have seen a surge in part exchanges – jumping from around five per cent of our activity to 40% in the space of a fortnight.”
