Used car dealer market trends

Car dealer handing the keys over to the new car buyer(last updated July 2019)

What has been happening in the used car trade

The structure of both the new and used car trades has changed a great deal in recent years. New cars are now available from independent 'car supermarkets', import brokers and internet dealers as well as from the traditional franchised main dealers. Meanwhile, the franchises are now heavily involved in used car retailing, as too are the giant car supermarkets. The internet has become an ideal tool for advertising and searching for used cars and is used by traditional dealers, online 'virtual showrooms', small home-based 'dabblers' and private classified advertisers to sell vehicles. eBay Motors is now a very popular method of selling used cars and is used by both private sellers and the trade, although there are various other popular motors and general classified websites to choose from.

Another recent development is the appearance of large high profile internet dealers like Webuyanycar.com, which advertise nationally and operate through a network of affiliated garages. A lot of people now search for a car online and then arrange a test drive once they've decided on the model they want.

Many of the larger dealers have taken steps to improve the image of used car retailing. These include quality assurance and 'approved used car' schemes, low-pressure sales tactics and no-quibble warranties. Some have taken steps to employ more women - this can help to attract female customers.

Nevertheless, the government recently investigated the used car market and found quite widespread evidence of dodgy practices like clocking. The Office of Fair Trading (OFT - since replaced by the Competition and Markets Authority) took action in 2010 by publishing special guidance for used car dealers on trading fairly and staying on the right side of the law. In 2014 the government's Used Car Commission found that the industry was still giving rise to large numbers of complaints and in need of improvement, putting forward several proposals for addressing the problems that had been identified. The government asked the Commission to develop used car codes of practice to improve consumer protection. The Motor Industry Code of Practice for Vehicle Sales was launched in October 2016. You can find out more on the Motor Ombudsman website.

Cars themselves have become better made and better equipped but much more complicated over the last ten years or so. Even the most basic models now include sophisticated computerised systems which can be very expensive to repair. For the used car dealer, this means more points that need to be checked to ensure that a car is roadworthy and in saleable condition.

As concerns about carbon emissions, climate change and dwindling oil reserves grow, hybrid and all-electric cars are slowly becoming more popular with motorists. These new technologies present their own challenges for the used car industry - electric cars, for example, are commonly leased rather than bought outright as their expensive batteries have a finite life.

After years of gaining in popularity and eventually overtaking petrol car sales, diesel car sales may now have peaked as concerns grow over the harmful effects of nitrogen dioxide emissions. During 2017 several car manufacturers offered significant discounts on new diesel models and many car dealers also reduced the price of used diesel vehicles. In 2018 the government confirmed that it would be banning sales of new petrol and diesel cars and vans from 2040.

The paper tax disc was scrapped in October 2014, meaning that the tax can no longer be transferred from one owner to another and dealers can no longer acquire used vehicles with some tax remaining on them. This means that to drive any stock vehicle on the road a dealer must either use trade plates or register it to themselves and then tax it. It also means that they must be sure to inform the DVLA when they sell a vehicle on, rather than relying on the buyer to do so.

The used car market

Demand for used cars was strong during the early and mid 2000s, when motorists had plenty of money to spend. Unfortunately, the late 2000s saw people cut back sharply on their spending. Demand for used cars plummeted as sharp fuel price increases, road tax rises, and the rising cost of living forced motorists to tighten their belts. Used car values fell sharply too.

Late 2009 did see things improve a bit though, perhaps helped by motorists trading down from new cars to used to save some money. The government's scrappage scheme also helped the industry, even benefiting the used car trade according to some dealers. Motorists continued to favour used cars over new during the early 2010s, although economic hard times meant that most people took steps to reduce their motoring expenditure wherever possible, avoiding changing their car if they could help it. Things did start to pick up in 2013, and the UK motor industry managed to outperform its European counterparts by a considerable margin. 2014 and 2015 saw the economy continue to improve, and used car sales were reasonably buoyant despite a surge in the number of new cars sold. The used car market continued to perform well during 2016, with average values rising strongly in the middle of the year. The economy slowed during 2017 because of the uncertainty surrounding the Brexit negotiations and sales of new cars fell back somewhat. The used car market held up well in the first half of 2018, with total sales about the same year on year. Sales of ultra-low and zero emission cars increased by nearly a quarter to just under 27,000 and demand for diesels rose by 3.2%.

Keeping up with developments

An excellent way of keeping up with industry developments as they occur is to join a trade association. Motor traders are represented nationally by two lead industry associations, the Society of Motor Manufacturers and Traders (SMMT) and the Retail Motor Industry Federation (RMIF). Visit their websites to find out more.

Subscribing to a trade journal is another good way of keeping up to date with developments. Automotive Management (AM) regularly covers the latest industry issues.

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