Sales of second-hand vehicles were up 5.2% in the first three months of the year compared to the same period last year, but trade in electric cars more than doubled - rising 120%.
The used car market has benefited from supply issues in the new car segment, which has forced many buyers to consider a second-hand model instead. As a result, demand and prices for used cars have grown considerably.
Figures from the Society of Motor Manufacturers and Traders (SMMT) show that 1.77 million used car sales took place between January and March 2022 - 86,500 more than in the first quarter of 2021.
The latest figures from Auto Trader’s monthly used price index show that used car prices were 32% higher in April 2022 than a year earlier, although months of rapid price growth have now stalled.
The first quarter figures reflect the unusual state of sales last year. January and February figures were higher (17% and 7% respectively) as dealers were forced to shut showrooms at the start of 2021 but March’s figures were down 7% as March 2021 saw a surge in transactions as dealerships reopened fully.
Industry experts say that while March’s performance was lower than the previous year and still 12% behind pre-pandemic levels, the used market remained strong in the face of struggling new car sales, the rising cost of living and a shift in buyer interest in electric vehicles.
James Fairclough, CEO of AA Cars, commented: “The new car market’s loss has been the second-hand market’s gain.
“The two factors that have combined to push down new car sales are also boosting the used market.
“The first is the dearth of supply of new cars for sale. The number of new vehicles rolling off UK production lines in the first quarter of the year collapsed by a third compared to Q1 2021, and many foreign plants are producing far fewer cars than usual too.
“By contrast, used cars have an obvious advantage - availability.
“But there are signs that the cost of living squeeze is helping tilt things in favour of used cars too. Inflationary pressures and increasingly bleak economic news are leading many buyers to think carefully about big-ticket purchases like cars.”
He added that the potential savings between new and used cars was also stimulating interest in used EVs as buyers considered the environmental and running cost benefits in the face of soaring fuel costs.
Jim Holder, editorial director at What Car?, said the used car market would continue to benefit from the supply issues in the new car chain but warned that eventually that constricted supply would hit the used car business as well.
He commented:“With no end in sight for the semiconductor shortage in the new car market, the used car market is expected to enjoy another strong quarter this year, even if the latest figures from the SMMT suggest the market is starting to stabilise.
“Used buyers remain the most active in the market, according to our latest research. However, used car stock is inherently linked to the new car market, and the delivery delays in new car sales, especially for electric vehicles, will mean things like the used market for electric vehicles is not growing at the rate it needs to, which will present a problem for the sector in the years to come.”
Auto Trader’s Ian Plummer also warned that the used car market, particularly for newer models, would soon feel the pressure on the new car chain.
He said: “If there are fewer new cars rolling off the production line, then it stands to reason that there are fewer used cars to be sold. Today’s figures underline the point with a not insignificant slide in used car sales compared to pre-Covid levels. The lingering supply chain crunch means fleet operators and leasing firms are hanging on to vehicles for much longer, further limiting the number of used cars entering the market.”
He said that while newer used cars - up to three years old - were most vulnerable to this, sales of older models were stronger, reflecting a more plentiful supply of vehicles.
Mike Hawes, chief executive of the SMMT, said, “With the new car market hampered by ongoing global supply shortages, growth in the used car market is welcome, if unsurprising especially given we were in lockdown last year.
“Electric car sales are energising the market, with zero emission vehicles starting to filter through in larger numbers to consumers looking forward to driving the latest and greenest vehicles.
“Although there is some way to go before we see the recent growth in new EVs replicated in the used market, a buoyant new car market will be vital to help drive fleet renewal which is essential to the delivery of carbon savings.”