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Used Car Sales To Rise By 5% In 2024 Despite Supply Dynamics Shift
Auto Trader anticipates a 5% increase in used car transactions for 2024, despite market challenges. Retailers must adapt to supply constraints, the rise of electric vehicles (EVs), and a shifting brand landscape. Auto Trader's comprehensive analysis aims to help retailers navigate these changes.
According to Auto Trader's latest market analysis, the used car market is set to perform well in the latter half of 2024. Sales are expected to rise by 5% year-on-year (YoY) to approximately 7.6 million transactions. This growth is driven by strong consumer demand and stable economic conditions.
The number of sub-five-year-old cars on the road will be at its lowest since 1995 by the end of 2024. The pandemic significantly impacted new car production, resulting in a 28% decrease in cars under five years old compared to 2019. This shortfall has not affected all manufacturers equally.
Some brands were better insulated from factory closures and parts shortages during the pandemic, allowing them to resume production faster. Others saw sales volumes decline due to pre-existing trends exacerbated by supply issues. For instance, Vauxhall, Ford, and Mercedes-Benz will have significantly fewer sub-five-year-old cars on the road by the end of 2024.
The surge in EVs entering the market is another significant factor. By the end of this year, around 4% of cars on the road will be EVs, compared to 88% internal combustion engine (ICE) vehicles. By 2033, over a third of vehicles will be electric, while petrol and diesel cars will account for about half.
This shift means there will never be more sub-five-year-old petrol or diesel cars on the road than there are today. By 2028, approximately 33% of all under five-year-old used cars will be electric, up from around 15% by the end of 2024.
Changing Forecourt Dynamics
The changing dynamics in forecourts are evident as retailers increasingly source older vehicles due to supply constraints. In 2019, cars aged between five and ten years accounted for just 13% of franchise retailers' forecourts; today, it's nearly a quarter (22%). For supermarkets, this figure has risen from around one in ten to nearly a third.
Marc Palmer, Head of Strategy & Insights at Auto Trader, stated: "2024 has had its challenges but overall performed well. Our outlook for the rest of the year remains positive based on current trends." He emphasized that retailers need a blend of instincts and insights to navigate the evolving market dynamics.
Adapting Retail Strategies
Retailers should review their stock mix by brand, age, and fuel type to assess potential disruptions due to increasing electrification and changing brand landscapes. Using data can help identify opportunities and determine if adjustments are needed to insulate businesses from future supply challenges.
Auto Trader has published an interactive analysis on the future car parc to assist retailers in planning and preparing for these changes. The analysis includes detailed breakdowns by fuel type, age cohort, and brand.
Despite challenging conditions like supply constraints among one-to-five-year-old vehicles falling by approximately 16%, used car sales increased by around 5% YoY in H1 due to strong consumer demand. June saw the highest rise in demand on Auto Trader in 15 months, with July up by 4% YoY so far.
The average monthly visits to Auto Trader rose by 9% YoY over this period, with used cars selling faster than last year. Cars are currently selling five days quicker than they did in July 2023.
With no immediate signs of declining demand or consumer confidence—boosted by a stable economic backdrop including softening inflation—Auto Trader expects an additional circa 350,000 used car sales this year, representing a YoY rise of around 5%.
A few brands have seen volumes increase due to more sales during this period: MGs and Teslas have seven times more sub-five-year-old cars on the road compared to 2019; Kias have increased by 9%. This disruption in stock dynamics presents challenges for retailers who must source older vehicles requiring more preparation and face increased competition for stock.
Auto Trader Group plc is the UK’s largest automotive platform listed on the London Stock Exchange since March 2015 and part of the FTSE 100 Index. Its purpose is "Driving Change Together" responsibly through creating diverse cultures and promoting environmentally friendly vehicle choices.
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