nothard philip 400

The UK used car market is “significantly behind 2020” according to Cox Automotive, which has reported that demand has outstripped supply so far this year.

According to its index detailing supply and demand for wholesale used vehicles, demand was at a value of 90.4 and supply at 62.4 as of mid-February. The company said a reduction in the number of part-exchanges entering the wholesale market was partly responsible for the shortfall.

The SMMT reported a -14.9% drop in used car transactions in 2020 with 6,752,959 units changing hands compared to 7,935,105 the year before. However, that was better than previous expectations, as Cox previously forecast 6.41m sales for the year.

Philip Nothard (pictured above), insight and strategy director at Cox Automotive, explained: “Changing consumer habits saw an increased demand for used cars that continues into this year. With the market already undergoing a shift towards digital retail prior to the pandemic, retailers were able to swing their focus to e-commerce remarkably quickly and capitalise on this demand.”

He added that optimism was increasing among dealers ahead of the UK’s planned easing of lockdown restrictions.

“As expected, trade values have eased as buyers become increasingly selective about what they buy, with accurately graded and retail-ready vehicles seeing the highest demand. In some cases, retailers are holding back from increasing their stock levels and are focused on only replenishing sold volumes.”

“Market sentiment indicates that retailers are not anticipating the same sales activity level once the current lockdown eases. While we should see increases, it will not be to the levels observed in quarter three 2020 that were bolstered by substantial pent-up demand.”

It comes as the European Automobile Manufacturer’s Association (ACEA) reported a 24% reduction in new car registrations across the European Union in January, pointing to a prolonged future shortage of second-hand vehicles across the continent.

Year-on-year, EU sales fell from 956,447 to 726,491 units, which marked the lowest January on record. The majority of the fall was credited to Covid-related restrictions, but the organisation added that many markets also had one less day’s trading, which further impacted the total. Autovista Group claimed the downturn was 16% when figures were adjusted for equivalent working days.

Nearly all 27 EU markets experienced double-digit losses last month, including three of the four major ones: Spain was the worst affected, falling by 51.5%, followed by Germany, down 31.1% and Italy, which dropped by 14.0%. France was the best performing major market, down by a comparatively low 5.8%.

Along with Sweden, France was the only EU country not to see a double-digit drop. The former was the only country in the bloc to experience an improvement in sales – up 22.5% – which followed a tax increase in January 2020 that led to low registrations a year ago.

January new car registrations were also poor in the UK, falling by 39.5% according to the SMMT. “As a result, the March new plate has become increasingly crucial for the sector, however 75% of dealers in a recent Cox Automotive survey have indicated that new car orders for March are down year-on-year between 10 and 50%,” said Nothard.

Despite their tumbling numbers, new car sales in the UK are said to be increasingly moving online. Automotive e-commerce specialist GForces said home delivery of vehicles sold via its platform rose by 35% between January 2020 and January 2021 and proved especially popular during lockdowns, accounting for 14% of its sales in April.

It claimed 10am to midday was the most popular time for customers to buy a car online, said one was sold via its platform every nine minutes and suggested such buyers were purchasing from further afield, with an average delivery distance of 80 miles, compared to the industry-standard 35 miles.

The company also said new payment methods such as Android and Apple Pay were becoming increasingly popular and accounted for £23m worth of transactions since they were added to its platform.

smith tim 400

Tim Smith (pictured above), chief commercial officer of GForces, said: “The UK is experiencing a huge acceleration in online car buying, but this is still likely to complement traditional dealerships with physical sites.

“One can be certain that there is much more change to come and that it will come quickly [and] there has never been a more pressing need for the auto industry to invest in online buying platforms,” he added.

“However, that is not to say that the traditional car showroom is consigned to history. Far from it in fact. They have a critical role to play. Blending ‘bricks and clicks’… is the key to the future.”

Auto Finance E-bulletins

Sign up to receive an e-bulletin when we post new Auto Finance articles

You can unsubscribe at any time with one click.