Cox Automotive has predicted a slow yet steady recovery for the UK’s used car sector over the rest of 2023 but warned that challenges persist.

Philip Nothard, insight and strategy director at Cox Automotive

Its latest AutoFocus insight update explores a baseline, upside and downside scenario for the remaining half of the year. The baseline scenario – seen as the most likely – predicts slow recovery based on increasing consumer confidence but says substantial recovery is not expected until 2024.

According to Cox, retail pricing is stable despite the economic challenges, and consolidation and acquisition activities in the wider vehicle industry will positively impact transaction numbers in the used sector, resulting in a more streamlined and efficient marketplace.

Its industry experts predict a total of 7,154,047 units across 2023; a 4% year-on-year increase, but still 3% below the average pre-pandemic yearly figure. The company forecasts 1,866,540 transactions in Q3, softening to 1,607,517 in Q4.

With various challenges continuing, a more substantial recovery is not expected until early or mid-2024. Factors including global economic conditions and energy-related issues continue to act as obstacles to overall growth.

Philip Nothard, insight and strategy director at Cox Automotive, said: “The global loss of 42 million new vehicles in production has permanently impacted the future composition of the used market. However, our analysis points to a steady improvement in the UK sector for this year, which can be partly attributed to production cycles moving back to near normality.

“It nevertheless remains a changing landscape and the impact of supply and demand on valuations in the used sector has become increasingly evident in recent months.”

He added that concerns of a “cliff edge” in used vehicle values should diminish once the economy stabilises.

Nothard also explored the used market for battery electric vehicles (BEVs) – and highlighted that just 11% of independent dealers stocked BEVs as part of their used vehicle inventory in 2022, compared to 64% of franchised dealers. This creates uncertainty around the pricing and availability of pre-owned electric vehicles.

“By the end of 2023, more than a fifth of 0- to 1-year-old vehicles in the UK parc is expected to be a BEV, and this figure is projected to increase to 41% for 1- to 3-year-old cars by 2027. To keep pace with this rapid market shift, the sector must prioritise education, knowledge-sharing, and legislative measures to support the ownership and stocking of pre-owned electric vehicles.”

To read the new issue of AutoFocus, click here.