Peter Vosper: Used cars surging, new cars stalling

The latest Society of Manufacturers and Traders (SMMT) data reveals two completely different stories.

Firstly, it shows the used car market surging ahead with four million first half transactions making a welcome return to pre-pandemic levels.

Significantly, one in ten of those cars were electrified, with zero emission vehicles reaching 3.4% share-clear evidence that where there is affordability and choice consumer demand will follow.

On the other hand, the new car market stalled with the market posting its weakest July since 2022 and more moderate electric vehicle growth compared with the recent trend.

However, this is expected to be a short-term softening, with the market’s sensitivity to external factors heightened by the gap between the announcement of the Electric Car Grant (ECG) and full details of the models that will qualify – a gap which has inevitably led to a pause in purchasing decisions.

The new van market continued its decline for an eighth consecutive month with registrations falling 5.1% compared with the same month last year.

It was therefore no surprise the Bank of England decided to cut interest rates for the third time this year to 4.0%. This will hopefully ease the pressure on both consumers and dealers. 

The strength of the used car market shows the consumer considers there is better value for money in this area than new cars at the moment. The manufacturers continue to struggle with profitability and meeting the electric vehicle share and although the government has offered a subsidy on cars below £37,000 there are other restrictions which complicate which cars are available for this.

In the meantime, the Chinese manufacturers continue to introduce new product and both BYD and Chery (Omoda and Jacoo) achieved over 3% of the new car market in July. There are more Chinese brands on the way, and the European manufacturers need to introduce more lower priced range products to compete.

Currently, they appear to be moving their attention to the business and fleet market to compensate for the fall in Motability sales and offering deals to them of electric vehicle product.

There will be more activity as we move into September and more offers will entice consumers back into new cars if the product and pricing is attractive.