Auto Trader gauges impact of used car supply shortage on car supermarkets

The lack of new car supply over recent years will significantly impact the UK’s car supermarkets next year who will struggle to secure used cars in the 3–5-year age bracket.

Speaking about the future of auto finance at the Financing & Leasing Association (FLA) Financing the Future conference, Rachael Jones, director of automotive finance at AutoTrader, said its forecasts showed that the availability of used cars in the 3-5 years age bracket was going to be ‘incredibly challenging’ for the car supermarket segment.

The 3-5 year-old stock traditionally accounts for between 45 -50% although Auto Trader predicts there will be 39 per cent less stock available. In terms of car aged between 0-3 years, car supermarkets will face a 22% drop in available stock.

“If you’ve got retailers that really operate in 3-5-year-old stock,” she told delegates at the September 12 event, “they are going to really feel the pinch in 2024 and for the next few years.

“Supermarkets are definitely going to be affected. They also used to get a little bit of under one year-old stock, although they’re unlikely to get their hands on that any time soon so they really are going to have to shift into the older market.”

In terms of Auto Trader’s sales forecasts for the new car market, 2024 was predicted to be around 1.85-1.9 million, down from a pre-pandemic 2.5 million, adding that there were interesting dynamics happening despite retail demand softening

“Other channels have started to grow in volume,” she said. “A look at year-on-year sales channels showed Motability up around 56% year on year- accounting for 14% of all new car sales for the year to date.

“Short cycle business including pre reg demo and rental was massively up year-on-year, albeit from a small base volume wise – up 65% year on year.”

She noted that diesel sales now accounted for less than 5% of total volume of new car sales indicating ‘a real dynamic in terms of electric vehicles and alternatively fueled vehicles that is starting to take a lion’s share in the market’.

Auto Trader’s forecast for 2024 car sales was pegged provisionally at 1.9 million cars although there were several factors that may mean a revision by the end of September including the prospect of a General Elections which could impact consumer confidence.

“It’s difficult because demand is softening in the retail market and we don’t know how OEMs are going to incentivize to get more consumers into vehicles. We don’t know how much they’re going to push into fleet and it’s also very difficult to say what manufacturers will do to meet that 22% of sales mix when the ZEV mandate kicks in next year. Will they force it and maintain current volume aspirations or will they pull back on total volume so they can meet the mix requirements?” she said.

In terms of independent dealerships, she said they had visibly started to stock more cars over 10 years old, increasing from 25% in 2019 to 31% today.

Jones said that while the impact of low supply continues to impact availability of stock, the overall use car market looked healthy, with tight supply and good demand protecting prices which remain up 4- 5% year-on-year overall.



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