What Drives Used Car Market Growth?

Experts have suggested that the second half of 2019 will see the used car market continue to grow, as the new car market struggles amidst economic uncertainty and an increasingly throwaway culture, not to mention the impact of the WLTP regulations. 

It’s not only franchises that are seeing increases in the market either. Independent dealers are also reporting record turnovers. The used car market thrived in 2018 and it is doing even better in 2019 with four out of five dealers investing in additional stock in 2019. 

But why the significant increase in confidence?

Finance - A “Challenges of 2019” seminar held late last year found that consumer finance had reached around 50% for the used car market (compared to 90% for the new car market). This proves that people are now looking at second-hand cars more as long-term investments, rather than just vehicles that might prove ‘good enough’ for the school run.

Depreciation - With an increase in supply, the depreciation rate of new vehicles is expected to rise from around 12.4% in 2018 to at least 15% this year. The faster cars depreciate in value, the more powerful the used car market will become.

Size - The used car market is roughly four times the size of the new car market and it will only get bigger as time marches on. There are simply more used cars to choose From now than there ever has been before and consumers love choice.

Brexit - The word on everybody’s lips that didn’t even mean anything until a few years ago. The perpetual worry over whether or not Brexit will result in some sort of economic disaster means that people are simply less willing to spend a lot of money on luxury items such as holidays, nice clothes and brand new cars. In such a climate, the used car market is, of course, going to thrive.

Pricing Pivot - Jonathan Smoke, chief economist at Cox Automotive, believes that “Wholesale supply is now post-peak and starting a gradual decline.” He feels that the used market might be the answer to the “affordability challenges in the new market.” It’s hard to argue with the man, particularly given the way that 2019 has been rolling out thus far.

Diesel - Despite a strong public backlash resulting in the sales of new diesel vehicles plummeting by 30%, used diesel sales actually rose in 2018. The crackdown on air pollution that has led to new car buyers shunning these environmentally unfriendly vehicles also means that second-hand diesel cars are looking like an incredible deal that’s just too good to pass up for many owners. This is particularly true for new drivers, for whom the initial cost of a hybrid or electric car would often be beyond the realms of possibility.

So, it appears the used car market is continuing to flourish in 2019, with independent and nationwide dealerships like Peter Vardy experiencing some significant gains. In such uncertain times, the market will undoubtedly only grow bigger and more vital.