Used car demand is slowing down, but stock shortages are so acute that the market is likely to stabilise at its current level for years to come, said Alex Wright, managing director of Shoreham Vehicle Auction (SVA).
The cost of living and rising inflation have impacted retail used car demand during 2022, affecting the wholesale market with falling prices and reduced sales.
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With 1.72m fewer new cars sold between January 2020 and May 2022, the market has a shortfall of 1.72m used cars, with dealers retaining a greater percentage of their part exchanges against their new car sales.
These trends combined have created a wholesale used car shortage of over 2m since Q1 2020, highlighting the extent to which the sector has been badly affected by new car shortages created by the global semiconductor crisis.
“The market is so short of stock that even if demand remains depressed for a prolonged period, prices will remain strong. We do not predict a price crash like we’ve seen in previous years, as each month the supply shortage is getting worse,” said Wright.
“We believe prices will stay at their new normal for another two to three years while the hole in the used car supply is slowly filled,” said Wright.
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