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Used car sales skyrocket on pent-up demand
Used car sales in the UK have, predictably, soared this year when compared with 2020. According to the latest data from the Society of Motor Manufacturers and Traders (SMMT), second quarter transactions increased by 108.6% in 2021 compared with the same period last year. April saw growth of 307.4%, followed by the best May and June since records began. In total, there were over 2.1 million used car transactions in just three months.
As Q2 last year saw the nation slowly emerging from the first national lockdown, it’s easy to dismiss the large increase as an unfair comparison. However, the used car market made an impressive recovery in the summer of 2020 – bouncing back from a 74.2% plunge in April to a drop of just 17.5% in June, according to dealerauction.co.uk. 2021 Q2 sales are up 6.6% on 2019 pre-pandemic levels – the best Q2 performance and almost the best quarter ever for the used car market.
What is driving this used car sales trend?
Successive national lockdowns due to the COVID-19 pandemic effectively shut down many areas of the economy in 2020, including the automotive industry. Sales fell through the floor, as businesses remained closed, and many consumers began a year of working from home. This double blow of 1) finding it more difficult to purchase a vehicle and 2) not relying on vehicles as heavily had a major impact on sales.
As the economy opens back up and the UK slowly returns to something resembling life as usual, businesses are bringing employees back to their offices, and once again the daily commute becomes a regular part of life for many. Pent-up demand for vehicles is finally let loose on showrooms and forecourts across the UK and this is showing in recent sales figures.
Mike Hawes, SMMT Chief Executive, said: “This is welcome news for the used car market as transactions rebounded following nationwide lockdowns which closed retailers. More motorists are turning to used cars as supply shortages continue to affect the new car market, and the increased need for personal mobility with people remaining wary of public transport as they return to work.”
How can dealers capitalise on increased demand?
With more cars back on the roads comes a rise in unexpected mechanical and electrical faults – especially with used vehicles. This provides dealers with an opportunity to protect their customers’ investment. Many used vehicles will no longer be covered by their dealer warranty or will be nearing the end of the warranty period. Therefore, extending a customer’s warranty is a great way to build trust, increase retention rates, and improve profitability.
Car Care Plan is an award-winning provider of warranty products, offering bespoke packages for the automotive industry’s leading manufacturers and dealers. Customers also benefit from extensive support services, including marketing and dedicated account teams who offer help when needed. To learn more about Car Care Plan’s warranty products, contact our friendly customer services team.