The UK used car market grew by 5.1 per cent in 2023, thanks to revitalized supply, leveling off prices and a record year for electric vehicle (EV) sales.
Latest figures from the Society of Motor Manufacturers and Traders (SMMT) show there were 7,242,692 used car transactions last year, with drivers turning to more affordable second-hand motors after feeling the impact of rising prices. cost of living.
The growth recorded throughout last year meant that in 2023 more than 350,000 second-hand cars changed hands than in the previous year.
The motor body said this signals the end of supply constraints that negatively affected both the new and used markets after the pandemic.
SMMT figures show the used car market grew by 5.1 percent in 2023, with price leveling and increased supply attributed to the growth.
Small cars were the most popular among second-hand buyers, accounting for almost a third (32.1 percent) of all used transactions last year.
This was probably driven by many motorists looking to replace their existing cars with something cheaper to run during the recent cost of living crisis.
Midsize hatches were the second most popular (26.6 percent), ahead of SUVs (15.2 percent).
It’s a stark contrast to the new car market, where SUVs are almost as popular as smaller models. However, their higher 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. Small, efficient cars are most in demand, while gas-guzzling SUVs make up a smaller portion of the market.
The growth recorded throughout last year meant that more than 350,000 second-hand cars would change hands in 2023 than in the previous 12 months.
James Hosking, managing director of AA Cars, said the used car market is being “stimulated by a powerful combination of improving stock levels, stable 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 at the value of the used market.
‘Many will be pleasantly surprised at the value for money that the cooling in prices is bringing to the second-hand market.
“The latest AA Cars used car index showed the average price of the UK’s most popular used cars fell 3.3 per cent in the final three months of 2023 compared to the previous year.”
Falling electric car prices spark record adoption of second-hand battery models
Used gasoline and diesel sales accounted for the vast majority (94.3 percent) of the overall second-hand car market.
However, the sale of used battery electric vehicles played a key role in improving transaction volumes, as more drivers were able to purchase less expensive second- and third-hand battery cars.
Sales of electric vehicles almost doubled (90.9 percent) to 119,000 units last year, the SMMT said.
This was a record level, as electric vehicles now account for 1.6 percent of the market share, up 0.9 percent from 2022.
Petrol and diesel cars continue to dominate the used car market, but sales of second-hand electric vehicles almost doubled year-on-year to almost 119,000 transactions, the SMMT said.
Record sales of used electric vehicles also helped boost the used car market, with last year’s extra supply and price drop meaning people have cheaper options available to buy.
This inevitable increase was helped by last year’s drop in used EV prices, as well as an increase in supply as more models arrived in new and then used markets.
While still a relatively small percentage of total sales, the increase shows that when there is a greater variety of cheaper electric cars, there is an appetite for affordable electric vehicles.
However, the industry has been calling for more efforts and incentives to encourage change.
His sentiments have been backed up by a recently published Lords committee report that wtorned tThe government says a “combination of higher purchasing costs, insufficient charging infrastructure and mixed messages” risks slowing the take-up of electric cars in Britain.
Failure to increase appetite for them could seriously jeopardize the country’s chances of meeting Net Zero goals, he concluded.
Hybrid and plug-in electric cars were also popular, with sales increasing by 40 and 25.1 percent respectively.
Collectively electrified vehicles represent 5.6 percent of the market.
While electric vehicle collection is on the rise, industry executives are calling on the Government to do more to allow people to switch, including removing VAT on charging.
Mike Hawes, chief executive of SMMT, commented on the rise in electric vehicle sales: “The demand is there, but to sustain it we must enable all drivers to make the switch.”
“The upcoming Budget is an excellent opportunity for the Government to do just that: halving VAT on new electric vehicles, while making public charging as easy and affordable as plugging in at home, would ensure a transition faster and fairer for everyone, giving the UK a green space. economic boost.”
Richard Peberdy, head of automotive at KPMG in the UK, also highlighted how the depreciation of electric vehicles is potentially putting some drivers off the idea of switching to battery power.
‘As stock levels have increased in the used car market, prices have gradually fallen; he said.
‘Although they are still higher than before the pandemic, a drop in prices is, of course, good news for many people looking for a vehicle. But the depreciation rates have been difficult for some sellers to accept, particularly those who bought certain electric vehicles new..
Ian Plummer, commercial director at online vehicle marketplace Auto Trader, said: “The used electric vehicle market may still be in its infancy, but last year it saw clear growth.
‘Significantly lower prices, greater availability and more options have proven to be an attractive combination for car buyers.
“With many second-hand models now at price parity with their traditionally fueled counterparts, along with lower running costs, the switch to electric has never been more attractive.”
Alex Buttle, co-founder of used car sales comparison website Motorway.co.uk, added: ‘With the growth of new car production, more owners have sold their cars to get new or nearly new vehicles.
“This resulted in a steady supply of high-quality used cars for savvy drivers eager to get a good deal.”
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