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Dealers enjoy a “healthy, buoyant used car market” at start of 2024
The start of 2024 has “provided unmistakable proof of a healthy, buoyant used car market”, according to Dealer Auction. The digital used vehicle auction platform, a joint venture between Cox Automotive and Auto Trader, saw the number of auctions ending as well as bids “rocket” in the first 91 days of the year.
With dealers buying up more used cars at auction, this surely reflects customer demand, with vehicles flying off forecourts. Indeed, the latest Auto Trader Retail Price Index, says “It took an average of just 27 days for a used car to leave retailers’ forecourts in April”, which is two days faster than the same period last year.
Why the increased demand for used cars?
Despite lingering inflation and high interest rates, consumer demand for used vehicles appears to be robust. There is a widely reported dearth of sub-five-year-old cars on the market due to the challenges of the worldwide pandemic, but used car sales are up circa 6.3% year-on-year in April and the average price of a used car has risen 1.1% month-on-month, according to Auto Trader figures.
“Although slightly behind the pre-COVID average of around 2.2%, it offers a positive sign of the market returning to historic norms.” The online car retailer credited the positive news with “favourable market dynamics”. However, those dynamics include an 11% drop in private new car sales in the year-to-date, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), with buyers turning to the used car market to reduce their expenditure.
How can dealers capitalise on rising used car demand?
Having the right stock is, obviously, paramount to capitalising on rising market demand. According to Dealer Auction, “the number of diesel vehicles sold decreased while sales of hybrids and EVs rose. It’s a sure sign that more eco-friendly vehicles are now filtering through into the used market”.
Auto Trader also stated “exceptionally robust levels of consumer demand (up 56% YoY)” for used EVs, despite an average price contraction of 0.4% month-on-month. Compare this with a 1.3% increase in the average price for used petrol vehicles, which also recorded an 8.4% increase in demand.
Used car dealers can further increase revenue per sale by providing their used cars with high-quality vehicle warranty and add-on insurance products. This helps protect their customers, increasing satisfaction rates, boosts retention and adds additional revenue per sale. Choosing the right aftercare partner is essential, however.
Learn more about Car Care Plan’s award winning warranty and five star Defaqto rated insurance products.