Strong demand supports “resilient” used market in H1 23

The used car market has shown signs of a steady recovery in the first half of 2023.

According to a half-year analysis by Cox Automotive, data for the first six months of this year points to a “resilient marketplace buoyed by strong demand and improved year-on-year performance.”

Consumer demand for used vehicles has continued to grow and can be attributed in part to the increased supply of de-fleeted vehicles into the marketplace as the lease and rental sector has moved to replenish stock.

Comparing the past six months to the same period in pre-pandemic 2019 shows that the average used vehicle entering the wholesale market today is older, carrying more miles, costs more, is selling faster and commanding a stronger margin.

NextGear Capital data shows the average used vehicle is 23% older (7.5 years in H1/23 vs 6.1 years in H1/19 and carrying 13% more miles (68,671 vs 60,848).

According to Manheim’s data, the average wholesale sold price of a used vehicle was 33% higher than in H1/19, and 3% closer to Cap clean (96.4% vs 93.8%).

The average retail margin, as captured by Dealer Auction, has risen by 4% vs H1/22.

Used cars are selling marginally faster than they did pre-pandemic according to NextGear Capital, at 60.3 days per vehicle in H1/23 vs 61.5 in the first six months of 2019.

Cox Automotive’s insight and strategy director Philip Nothard said: “It’s greatly encouraging to see just how consistently the used market has continued to recover over the past six months. This is hugely positive and, what’s more, we are now ahead of pre-pandemic levels. The return of supply in the new market has naturally played an important role but it’s key to note that growth in new car registrations has not materially tempered the used market.

“The good news is that overall, the used car market is in a more predictable and reliable state than we’ve seen since the opening months of 2020, and is well positioned to meet consumer demand. It is, however, very likely the average vehicle entering the wholesale market will continue to be older and more expensive than seen before the pandemic. Quite simply, more owners – be they fleet or private – are hanging onto their vehicles for longer, and the changing dynamic of the new car market combined with the economic environment means this will continue to be the case for the foreseeable future.

“As new BEV registrations continue to rise, driven primarily by fleet and leasing strategy, the used BEV market shows signs of stabilisation after the severe adjustments experienced in the first half of 2023. Consumer and retailer confidence in the purchase of used BEVs remains crucial to the success of the transition to an electrified market.”