Forecasting the used car market for 2015

By Rupert Pontin

With the new car market statistics for 2014 released by the SMMT and new car registrations confirmed at a 10-year high of 2.476 million units, it is clear the UK motor trade is outperforming most economic sectors in the UK and, more importantly, Europe. It is also clear this success is not just restricted to the new car market. Used car sales have also been consistently strong throughout the year.

	Rupert Pontin, head of valuations at Glass’s, takes an in-depth look at what’s going on in the UK used car market

The growing UK economy and the resulting consumer feelgood factor are the key drivers, but let us not forget that European new car production has also forced the new car position to a great degree and this has had an impact on the used car market. It will further change the shape of the used car market during 2015.

Looking at used car trends from 2014 and 2013

The chart below details the changes in market dynamics in the past year, focusing on summary data from December 2013 and 2014.

The chart shows some fascinating trends and it is interesting to note that the average age of a vehicle has decreased by 5.6% over the past 12 months.

In some respects, this is contrary to what one may expect. With such a vibrant new car market, it would be logical to expect an increase in the volume of older part-exchanges and hence an increase in age. Indeed that trend has been evident from a trade perspective through wholesale channels, although this data implies that there has been an increase in younger cars coming to the market.

The concept of an increase in younger used vehicles being available for sale is certainly not new and the impact of the recovery from the recession bringing an increase in new car sales four years or so ago is part of the reason for this as fleets begin to defleet these cars that are now at end of lease in greater numbers.

However, this chart also highlights that the advertised used car volumes of the latest plate have also increased by a considerable 89.77% and clearly supports the widespread anecdotal discussion around increased pre-registration activity.