First of all, a disclaimer: it would take a genuine fortune teller to predict what has happened in the UK used car market over the past 3 years, so we’ll warn you now that this is predicated on our experience of the market on a daily basis, from speaking to used car buyers, to industry insiders, to manufacturers, and the data presented below is current at the time of writing.
What is happening in the used car market today?
Used car prices saw their biggest drop for 15 years in September 2023 with monthly prices dropping by 1.9%, and this off the back of a slowly worsening economic picture in general and a painful future outlook for petrol and diesel cars in particular.
What is driving this drop?
Broadly, you can separate this in to 3 main areas:
- Firstly, we’re seeing the impact of higher interest rates and a tightening consumer confidence/spending environment which has a double impact on used cars, with less demand and higher finance rates meaning dealers are less likely to pay higher amounts for your used car.
- Secondly, there is a dramatic change happening in new car supply, with a sudden plethora of stock across most manufacturers replacing the 3 years of scarcity which itself had a huge impact on used car price inflation. As new car supply improves, so used car demand and pricing cools.
- Finally, longer-term trends are beginning to be evident, with electric vehicles bucking the broader trend and only dropping circa. 1% in September, with combustion engine cars suffering more, particularly in light of higher oil prices, and more and more low emission zones across UK cities.
As we discussed recently, ULEZ zones are now coming into force across England and Scotland, meaning more and more consumers will be wary of committing significant capital into a depreciating asset which may become unwelcome in major cities in the medium-term.
What should you do if you own your car outright?
Firstly, it is perhaps worth reviewing your options, with discounts returning to the new car market, and far more options amongst plug in hybrid and electric vehicles than was previously the case.
With home energy bills now much lower, Electric and Hybrid charging at home should give you a cost of 4-5p per mile for EV driving, vs. 16-17p per mile for your petrol or diesel. To put that into perspective, if you’re driving 12,000 miles per year, you’re likely spending circa. £1950 per year on fuel, and could be spending £540 per year with home charging on electric driving.
It is worth checking whether your car meets the “Euro 6” engine requirements that most diesel engines need to meet to allow them to enter the UK’s low emission zones cost-free. However, remember if you wait until your model is ‘outlawed’ in major cities, it is likely the value of that car will already have plummeted.
As always, our Relationship Managers can give you the latest feel for the market in a considered, advisory Fact Find, saving you from the hassle of trundling around car dealerships or endless searches online on the best course of action.
We’re independent, and we’re here for the long-term, so if it is a good time to switch, we’ll tell you, and if it isn’t, we’ll tell you.
Get in touch now to book your time with Finn Donaldson or one of his team in the Retail team at Pike + Bambridge.
