Used car sales record worst results in years

Dramatic slump in used car transactions in Q2 2017

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Used car sales for the second quarter of 2017 have fallen significantly, in results published by the Society of Motor Manufacturers and Traders (SMMT) today.

Overall used car transactions fell by 13.5% compared to the same three-month period last year, with 1,832,400 used cars changing hands between April and June.

Used car figures are not necessarily a strong indicator of what is going on in car dealerships, as the published numbers include any used car that has had a change of ownership. This includes private sales, auctions, registration transfers within households and so on. However, a fall of 285,000 units in three months is certainly significant as it represents 3,000 fewer cars per day changing hands.

The SMMT (triumphantly?) points out that used diesel sales held steady with a negligible 0.1% drop, while used petrol car sales fell by 9%. Hybrid and electric used car sales were up by 24%, but still only make up a meagre 1% of the used car marketplace.

Given the collapse in sales of new diesel cars over the same period, it seems quite likely that many potential new diesel car buyers have chosen a used car instead. It is also very likely that a higher-than-normal number of those used diesel sales will be made up of dealer demonstrators, head office company cars, pre-registered cars and so on.

With manufacturers and dealers propping up their new car diesel registrations over the last few months with self-registered diesel cars, it is logical that there would be an increase in nearly-new diesel stock on dealer forecourts and at auction blocks.

Used car dealership forecourt

There is also talk of a diesel scrappage scheme being introduced at some point in the future, so buyers of cheaper used diesel cars may be reassured by the possibility that they could make a profit if they sell their car in a year if such a scheme comes into existence.

Worst Q2 results for years

The SMMT press release claims that this year’s results are “no surprise”, coming off the back of a record year last year. However, it conveniently fails to mention that the Q2 results for 2017 are also worse than both the 2015 and 2014 results, so at the very least it’s the worst result in four years (the SMMT does not publicly display older used car sales data).

Used car finance results published today by the Finance and Leasing Association (FLA) show that, despite the sales slowdown, used car dealer financing has actually increased compared to the same period last year. Both volume (4% more deals) and value (9% more overall borrowing) were up on last year, meaning an average increase of 5% borrowed per car) from dealerships.

This suggests that the biggest falls in used car sales have been at the bottom end of the used car market, where PCP finance is far less popular or relevant.

A blip or a fundamental shift?

As usual, the SMMT and other automotive industry commentators have queued up to imply that Brexit, elections and economic woes have affected the results. Given that this has been a rapid slump for both new and used cars after a long period of year-on-year growth, it certainly suggests that customers are hesitating to launch into a vehicle purchase at this time.

Another key factor, as it was for new car sales, would have been the General Election. Called in April and conducted in June, it will have affected all three months of the quarter.

Of course, this is only the result of one quarter. It remains to be seen what will happen over the second half of 2017 before we really start to understand whether this is a blip or a genuine shift in the marketplace.

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Stuart Masson
Stuart Massonhttps://www.thecarexpert.co.uk/
Stuart is the Editorial Director of our suite of sites: The Car Expert, The Van Expert and The Truck Expert. Originally from Australia, Stuart has had a passion for cars and the automotive industry for over thirty years. He spent a decade in automotive retail, and now works tirelessly to help car buyers by providing independent and impartial advice.

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