Surge in second-hand EV sales

SMTT figures show BEV sales were up by 119% to reach 40,228, while PHEV purchases rose 76% to 56,861 transactions. Hybrid electric vehicle (HEV) transactions also rose by 50% to 137,639, a new high. Growth was driven by an increasing number of ultra-low and zero-emission models filtering through to second owners and, combined, these vehicles represented 3.1% of the market.

Used petrol and diesel powertrain transactions, meanwhile, increased by 10.7% and 9.8% respectively, with a combined 7,277,291 units changing hands. It meant that even with record demand for alternatively fuelled vehicles, 96.6% of all used car sales were still either petrol or diesel models, evidence of how far the market must go to meet zero emission ambitions.

Mike Hawes, SMMT chief executive (pictured above), said: “With the global shortage of semiconductors set to ease later this year, releasing the squeeze on new car supply, we expect more of the latest, cleanest and zero emission models to become available for second owners. The demand for personal mobility has undoubtedly increased during the pandemic, so it’s vital we have healthy new car sales to drive fleet renewal and the used car market if we are to improve air quality and address climate change.”

Future demand

Looking ahead, UK dealerships should brace themselves for another year of used vehicle demand outstripping supply as the new car market continues to recover, according to Cox Automotive. The consultancy is predicting 2022 will end on 7.701 million used car transactions, a 4.2% increase year-on-year compared to 2021’s forecast of 7.392 million. This would be a 4.4% increase compared to the 2001-2019 average, but a 3% decrease compared to the most recent 2019 pre-pandemic performance.

Manheim auction data for January 2021 shows an evident change in the profile of vehicles entering the remarketing sector, with the average vehicle age at 100.9 months, an increase from 89 months recorded at the same time last year. Average mileage also increased from 64,996 to 70,162. However, despite an older vehicle profile, units are still selling at high numbers due to stock shortages, with the average selling price increasing by £1,917 from last year’s £6,133.

Philip Nothard, insight and strategy director at Cox Automotive, commented that although these numbers continue to increase, key wholesale indicators are now starting to fall more in line with pre-pandemic levels compared to the same period last year.

He explained: “Consideration must be given here to the months leading into the pandemic in the UK before the shutdowns towards the end of March 2020. The used car market was performing ahead of expectations, with the first two months of 2020 considerably ahead of previous years. In January 2021, although the government had lifted restrictions, the sector had established click and collect programmes which meant they could enjoy some vehicle sales, but consumers remained cautious. Therefore, sales remained relatively low compared to projections.

“With this in mind, although sentiment has started more slowly than expected in 2022, key wholesale indicators are starting to fall more in line with pre-pandemic levels than the same period last year. However, the data clearly demonstrates that buyers have to get used to a significantly older profile of vehicle, with stock still at a premium.”

Shortages remain

Nothard argues that new car production issues will remain until 2023, so a continuing shortage of used vehicles will drive up values and increase retail prices.

Cox Automotive analysis shows “nearly new” vehicles currently remain the most in-demand of all used car age groups. These vehicles are aged between zero and two years old and are usually sourced from leasing and rental companies, typically holding onto stock that would usually enter the wholesale market.

However, after months of unprecedented levels of rapid climbing values for used cars, Nothard believes a ceiling may have already been hit and he expects values to decrease. However, he warns that this will be a gradual process and much slower rate than many will hope for.

Nothard concluded: “The concern is that values will start to decrease at a time when profitability per unit is more vital than ever, but current supply and demand levels won’t allow that to happen. As long as new car supply issues remain and used cars continue to be dripped into the market rather than released like a tsunami, then natural market dynamics dictate that values will remain at current levels for some time.”