UK used car transactions were down by 6.2% year-on-year in the third quarter of 2020, according to new figures from the Society of Motor Manufacturers and Traders (SMMT).
The fall came despite high demand from buyers, which has caused spiralling used car values amid new car production problems, with the resulting shortages now having a knock-on effect on the used market.
The SMMT also attributed the relative decline to the high sales seen in Q3 2020 as dealerships reopened following the first Covid-19 lockdown. However, Q3 2021 was also down by 2% on the pre-pandemic figure for 2019, and was the weakest Q3 since 2015.
The SMMT has however reported big increases in sales of used electric and plug-in hybrid vehicles, up by 56.4% and 43.3% respectively, with the number of used EVs sold a new record for any quarter.
However, plug-in vehicles still made up just 1.4% of transactions, albeit up from 0.9% a year earlier.
For the year-to-date, the overall used car market is up 16.4% year-on-year, but down by 4% compared with pre-pandemic figures.
SMMT chief executive Mike Hawes said: “Despite the used car market declining in the third quarter, record sales earlier in the year, particularly in the second quarter, means the market remains up year to date.
“Given the circumstances, with the global pandemic causing a shortage of semiconductors needed to produce new vehicles, undermining the new car market, used transactions were always going to suffer too.
“This is particularly worrying as fleet renewal – of both new and used – is essential if we are to address air quality and carbon emissions concerns.”
Reacting to the figures, AA Cars CEO James Fairclough highlighted how the effects of the new car supply crisis were being felt in the used market.
He said: “While the used market is not affected directly by the semiconductor shortage that is constraining the production of new cars, the supply of second-hand cars can only be so elastic.
“Despite strong demand from buyers, finite supply is pegging back used car sales figures – albeit to a lesser extent than the decline seen in new car sales.
“With car factories in the UK and elsewhere churning out fewer vehicles than usual, the second-hand market’s trump card is availability – especially of hugely popular electric and plug-in hybrid models.”
Giving his reaction, Auto Trader commercial director Ian Plummer agreed that while there was still very large demand for used cars, there was simply not enough stock on the market to meet this.
He said: “Whilst we continue to see huge levels of consumer demand, as evident in the over 200 million visits to our marketplace in Q3 – a 32% increase on the same period two years ago – the lack of stock availability is beginning to impact sales volumes and undermining the potential opportunities these high demand levels should offer. From what we’re tracking in the market, supply was down around 12% in Q3, when compared with 2019.
“As a result of these supply constraints, coupled with the exceptionally strong demand, used car pricing continues its upward trajectory. In fact, October marked the 19th consecutive month of growth, with prices increasing a record 25.6% year-on-year.
“Astonishingly, nearly one in four of the nearly new cars available in the market (those aged up to 12 months) are currently more expensive than their brand-new equivalents. And further highlighting just how much demand there is in the market, in Q3 the average used car sold nearly 14% faster than it did in 2019 (25 days versus 29).”
