The UK’s used car market grew by 5.1 per cent in 2023, thanks to re-energised supply, levelling prices and a record year for electric vehicle (EV) sales.
The Society of Motor Manufacturers and Traders (SMMT) latest figures show there were 7,242,692 used car transactions last year, with driver’s turning to more affordable second hand motors after feeling the pinch from rising costs of living.
Growth recorded throughout last year saw over 350,000 more second hand cars change hands in 2023 than the 12 months previous.
The motor body said this signals the end of the supply constraints that negatively affected both the new and used markets post pandemic.
SMMT figures show the used car market grew 5.1 per cent in 2023, with price levelling, more supply attributing to the growth
Small cars were the most popular among second-hand buyers, accounting for almost a third (32.1 per cent) of all used transactions last year.
This was likely driven by many motorists looking to replace their existing cars with something cheaper to run during the recent cost-of-living squeeze.
Medium-sized hatches were the second most popular (26.6 per cent) ahead of SUVs (15.2 per cent).
Its a stark contrast to the new car market, where SUVs are almost as popular as the smallest models. However, their larger running costs make them less attractive to used buyers on a budget.
The rising cost of living has seen more drivers turn to second hand cars for affordability reasons. Efficient small cars are most in demand, while gas-guzzling SUVs represent a smaller share of the market
Growth recorded throughout last year saw over 350,000 more second hand cars change hands in 2023 than the 12 months previous
James Hosking, managing director of AA Cars said the used car market is being ‘spurred by a powerful combination of better stock levels, settling prices and strong demand’.
He told This is Money: ‘With household budgets still under pressure from the rising cost of living and high interest rates, many drivers who need to replace their car are looking to the value of the used market.
‘Many will be pleasantly surprised by the value for money that cooling prices are bringing to the second-hand market.
‘The latest AA Cars Used Car Index showed that the average price of the UK’s most popular used cars fell by 3.3 per cent in the final three months of 2023 compared to the previous year.’
Electric car price crash sparks record uptake of second-hand battery models
Used petrol and diesel sales accounted for the vast majority (94.3 per cent) of the overall second-hand car market market.
However, the sale of used battery electric vehicles played a key role in improving transaction volumes as more drivers were able to get purchase less expensive second and third-hand battery cars.
Sales of EVs almost doubled – up by 90.9 per cent – to 119,000 units last year, the SMMT said.
This was a record level with EVs now accounting for 1.6 per cent market share – up 0.9 per cent from 2022.
Petrol and diesel cars still dominate the used car market, but second-hand EV sales almost doubled year-on-year to nearly 119,000 transactions, the SMMT said
Record used EV sales also helped to boost the used car market, with the additional supply and price crash of last year meaning people have cheaper options available to buy
This inevitable rise was helped by the used EV price crash of last year, as well as an increase of supply as more models came onto the new and then used markets.
While still a relatively small percentage of overall sales, the increase demonstrates when there’s greater choice of cheaper electric cars the appetite for affordable EVs is there.
However, the industry has been calling for more effort and incentives to encourage the switch.
Their sentiments have been backed up by a recently published Lords committee report which warned the government that a ‘combination of higher purchase costs, insufficient charging infrastructure and mixed messaging’ risks slowing the adoption of electric cars in Britain.
Failure to boost appetite for them could severely risk the country’s chances of meeting Net Zero targets, it concluded.
Hybrid and plug-in electric cars were also popular, with sales up 40 and 25.1 per cent respectively.
Collectively electrified vehicles represent 5.6 per cent of the market.
While EV pickup is on the rise, industry executives are calling on the Government to do more to enable people to switch including removing the VAT sting on charging
Commenting on the rise in EV sales, Mike Hawes, SMMT chief executive, said: ‘The demand is there, but to sustain it we must enable every motorist to make the switch.
‘The upcoming Budget is a prime opportunity for government to do just that – halving VAT on new EVs, while making public charging as easy and affordable as plugging in at home, would ensure a faster and fairer transition for all, giving the UK a green economic boost.’
Richard Peberdy, UK Head of Automotive for KPMG, also highlighted how depreciation of EVs is potentially putting some drivers off the idea of converting to battery power.
‘As stock levels have increased into the used car market, prices have gradually been pushed downwards,; he said.
‘Whilst still higher than pre-pandemic, a lowering of prices is of course good news for many people looking for a vehicle. But the depreciation rates have been hard to take for some sellers, particularly those who bought certain EVs from new’.
Ian Plummer, commercial director at online vehicle marketplace Auto Trader, said: ‘The used electric market may still be in its infancy, but last year saw a definite growth spurt.
‘Significantly softened prices, greater availability and more choice has proven a compelling combination for car buyers.
‘With many second-hand models now at price parity with their traditionally fuelled counterparts, along with lower running costs, the switch to electric has never been more attractive.’
Alex Buttle, co-founder of used car selling comparison website Motorway.co.uk, added: ‘With new car production growing, more car owners sold their cars to get their hands on new or nearly-new vehicles.
‘This led to a steady supply of high-quality used cars for savvy motorists keen to get a great deal.’
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