Used Cars 2016: Market Trends

The new car market turned in a strong performance in 2016 despite growing economic and political uncertainty created by Brexit and the vote to leave the European Union.

New car registrations hit a record with 2.69 million vehicles sold. The market was driven by a powerful cocktail of low interest rates, cheap finance and strong PCP and PCH deals available to retail buyers.

Although the private sector tailed off in the second half, carmakers and dealers targeted fleet business to make up the shortfall. For 2017 the SMMT is forecasting the market will decline 5% or 6% to 2.5 or 2.6 million.

Looking at the top 10 volume brands, the biggest growth came from three premium brands Mercedes-Benz (+16.9%), BMW (+9%) and Audi (+6.4%).

The used car market also had a good year. We know this from the financials delivered by the listed groups like Pendragon, Lookers, Marshall, Inchcape and Caffyns and also from the dealer composite figures provided each month by dealer profitability specialist ASE.

The latest figures from the SMMT show that 2,148,050 used cars were sold in the UK in the third quarter of 2016, a 7.9% rise on the same period in 2015. Sales of diesel cars rose 10.8% while those of petrol grew 5.7% for the period. Consumer appetite for alternatively fueled vehicles rose 34.1% to 21,543 vehicles. The trend towards smaller cars continued, with superminis the best-selling body type (33.8%) followed by family hatchbacks (27.4%) and saloons (13.4%).

We can go to Auto Trader to get a more in-depth view of the used car market and identify what cars are most in demand. In January Auto Trader disclosed the most searched for in 2016, revealing the 10 make and models most popular amongst the circa 60 million monthly visitors to the used car portal.

Just as in the new car market where Audi, BMW and Mercedes-Benz performed strongly, so these brands are razor-sharp in the used car market.

BMW, Audi and Mercedes-Benz were the most searched for makes in 2016 followed by Volkswagen. Ford, the market leader in the new car sales, was in fifth place followed by another volume player, Vauxhall. A premium brand Land Rover was in seventh position with Peugeot, Toyota and Nissan making up the top 10 listing.

Breaking it down further we find that BMW had three models in the Top 10 most searched for cars with the 1-, 3- and 5-series. Mercedes-Benz had two models in the listing with the E Class and C Class and Audi also had a presence with the A3. Ford was represented by the Focus and the Fiesta, the UK’s best-selling new car and Volkswagen and Vauxhall were there with the Golf and Astra respectively.

Here the BMW 3-Series, Volkswagen Golf and Mercedes-Benz top the charts but the Ford Focus moves up into fourth place followed by the BMW 5 Series. The other cars in the Top 10 most searched for listing are the BMW 1 Series, Ford Fiesta, Audi A3, Mercedes-Benz E Class and Vauxhall Astra.

Searching for cars is one thing but what ultimately are the most in-demand cars? Looking at data provided by Auto Trader we can see what cars sold fastest on forecourts. Selling cars faster is good for stock turnover, which can deliver higher levels of profitability.

Auto Trader argues that using digital tools like its own i-Control can help dealers increase stock turn.  i-Control works by tracking live market movements, recommending stock to buy, where to find it, how much to pay and how much to sell it for, taking into account regional differences in supply and demand.

So, who did well? The Kia Sportage was the fastest selling used car in 2016 taking an average of 23 days to shift off forecourts. This popular SUV has performed strongly in the new car market with buyers appreciating its market-leading seven year warranty and over the years improved image and all round capability. It was followed in second place by the Toyota Aygo, which took an average of 24 days to sell, and the Nissan’s Qashqai +2 coming in third, with 25 days.

The Ford Fiesta, which was the UK’s fastest selling used car in 2015, didn’t make it onto 2016’s top ten list, which seems to be an anomaly. However, it did deliver a strong performance across many of the regional top ten lists, and was the fastest selling used car 2016 in the North West, South West, Wales and the West Midlands.

Karolina Edwards-Smajda, Auto Trader’s retailer and consumer products director, said: “It’s not a surprise that the Kia Sportage took 2016’s crown for the UK’s fastest selling car.

“It’s performed exceptionally well throughout the year and during a period of turbulence the Sportage, with Kia’s seven-year warranty, represents exceptional value for money and real peace of mind.

“Despite the turbulence in 2016, consumer confidence has remained extremely strong which has been reflected in both used and new car sales. Whilst undoubtedly 2017 will see some real challenges for the industry, with greater deals and financing options available we can expect the used car market to remain buoyant.”

Looking back, 2016 was a good year for the new car market, although it did weaken in the second half. It was a better one for used cars with increased volumes sold.  Large successful dealer groups like Pendragon focused more attention on used cars in 2016 to drive profits as new car margins came under pressure. And using Auto Trader data, we can see that premium brands were most in demand across the UK although Korean and Japanese brands were the fastest-selling.