Used car sales slip as low stock and cost-of-living crisis take effect

Used car sales have fallen for a second consecutive quarter, with 12.2 per cent fewer used vehicles changing hands in the months of July to September, new figures published this morning confirm.

Some 1,785,447 cars found new owners during the three-month period, in the latest sign that the squeeze on household finances is curtailing big-ticket purchases.

It is the first time that third-quarter second-hand car transactions slipped below two million for seven years, with the trade body saying the slowing market has been compounded by shrinking supply linked to fewer new models being delivered to customers.

Low stock and cost-of-living crunch put a squeeze on second-hand car sales: Figures released on Thursday show Q3 used motor transactions fell below 2million for the first time since 2015

While second-hand car values remain incredibly high, sales are down year-on-year by almost 10 per cent with 5.3 million used models changing hands so far in 2022.

Commenting on the latest report of falling used motor sales, Mike Hawes, chief executive at the Society of Motor Manufacturers and Traders, said the figures ‘come as little surprise’ due to the short supply of new cars that is largely linked to ‘sustained chip shortages’.

Ian Plummer, commercial director at used car marketplace AutoTrader, seconded Mr Hawes’ verdict.

‘Given the current economic backdrop one would be forgiven for equating the fall in used car sales to a similarly dramatic drop in demand from cash conscious car buyers,’ he said. 

‘But whilst demand is easing on the inflated levels recorded last year, in reality, the market is simply feeling the brunt of the massive dearth in available stock, fuelled by the circa 2.5 million new cars ‘lost’ over the course of the pandemic.’

Some 1,785,447 cars found new owners during the three-month period in the latest sign that the squeeze on household finances is curtailing big-ticket purchases

Sales in 2022 are down by almost 10% with just over 5.3million used models changing hands so far this year

Yet AutoTrader concedes that the squeeze on household finances will have an impact on the used car market. 

‘There’s no doubt that the cost-of-living crisis and rising interest rates are a potential headwind for the automotive market, and we do expect to see consumer demand ease, particularly during the traditionally quieter festive period.’

Richard Peberdy, head of automotive at KPMG says it was ‘inevitable’ that the booming demand for second-hand motors – and ‘very hot’ values – would begin to cool, which is now being ‘aided by harder economic conditions’.

The Fiesta is by far the most popular second-hand car to change hands, with over 16,000 more finding new owners in the months of July, August and September

Ford announced last month that the Fiesta – Britain’s most-owned car – will no longer be built from June next year

Unsurprisingly, the Ford Fiesta was the most-bought used car of the previous three months, racking up a total of 74,892 transactions, which is over 16,000 more than the Vauxhall Corsa in second place.

It follows news last month that Ford will stop making this country’s most popular car of all time in June 2023.

It will bring to an end 47 years of production that has seen almost 5million bought by Britons, making the Fiesta the most-bought car in UK history and the most-owned model on our roads today with around 1.54million in use.

This week, experts in stolen vehicle recovery services, Tracker, warned owners that their Fiestas could become a hotter target for thieves who will look to capitalise on the end of production and inevitable knock-on rise in the cost of spare parts for the hugely popular car. 

While the overall sector figures point to a slowing second-hand market, used electric vehicle sales bucked the trend.

While used electric car sales are bucking the trend, plug-in vehicles (including pure-electric, hybrid and plug-in hybrid cars) still only represent 4% of all second-hand transactions

The number of used battery cars changing hands rose 44.1 per cent in the third quarter to 16,775 transactions, adding up to 48,032 in the year to date. 

The SMMT report confirmed that the market for used hybrid vehicles also grew, up 2.5 per cent in the quarter, though plug-in hybrid transactions fell by 5.8 per cent per cent.

However, with pure-electric and hybrid cars combined these vehicles still only  account for a mere 4 per cent of all used transactions and therefore represent a fraction of the marketplace until more examples hit the road and become available to second-hand buyers at a later date.

‘It’s great to see a growing number of used buyers able to get into an electric car,’ Mike Hawes added, but said the Government needs to do more to make both new and used electric vehicles more appealing to drivers. 

‘The demand is clearly there and to feed it we need a buoyant new car market, which means giving buyers confidence to invest. 

‘Next week’s Autumn Statement is an opportunity for the government to make a long-term fiscal commitment to zero emission motoring, including adequate public charging infrastructure, which, especially given the economic headwinds, would go a long way to stimulating the market and delivering both economic and net zero progress.’

This post first appeared on Dailymail.co.uk