The used car market is set to slow down during Q3 and Q4 but will remain up on 2023 as a whole, according to Cox Automotive’s latest forecast.

The second half of the year will likely see volume slow down due to tightening supply into the market

Its revised baseline forecast, published in full in its latest Insight Quarterly update, predicts a slight slowdown in activity during Q3 and Q4 compared to its previous forecast, based on multiple factors that will temper wholesale supply and consumer demand. As a result, the forecast anticipates 1,885,782 transactions in Q3, falling to 1,617,609 in Q4.

But the total number of transactions sits just ahead of Cox Automotive’s previous forecast and the firm predicts 2024 will conclude with 7,434,709 transactions completed.

The full-year total is a 1.2% increase from Cox Automotive’s previous forecast, 2.7% up from 2023’s total transactions figure, and 0.8% up from the 2001-2019 average.

Philip Nothard, Cox Automotive insight director, said the used market showed remarkable resilience during H1, despite subdued retail demand, margin pressures, and ongoing constraints in prime three-year-old retail stock.

“In fact, the total number of transactions in Q1 and Q2 was within a whisker of our upside forecast for H1 and 3.5% ahead of our more conservative baseline forecast,” he outlined.

But he cautioned against assuming this trajectory will continue, however.

“The second half of the year will likely see volume cool due to tightening supply into the market, heightening price competition in the new car space, and continued low consumer confidence. Our baseline forecast for the full year, therefore, remains the likely scenario,” Nothard stated

Predominant factors include fast-moving dynamics in the new market, limited availability of in-demand ICE variants, volatile EV values, and consumer appetite for rising prices.

“When looking at the used market, we must always have one eye on the new, which is experiencing significant volatility right now. Supply also remains a hot topic among dealers and securing a reliable and sustainable flow of the vehicles most in demand remains hugely challenging. Used dealers also continue to feel the effect of the 3.1 million ‘lost’ registrations from 2020-23. These are the vehicles that ordinarily would now be replenishing forecourts up and down the country and their absence is palpable,” Nothard explained.

Changing fuel types are also impacting the vehicle car parc, as the number of ICE models entering the new market diminishes rapidly.

Cox Automotive also reiterated that used EV values remain volatile and are unlikely to settle until at least 2027, while manufacturer deals to force registrations under the ZEV mandate will also skew the market.

“Despite these challenges, the automotive sector is renowned for its resilience, and the used sector is no different. Significant hurdles are anticipated in the second half of 2024 and into 2025. Still, the volume of transactions we see should be taken as a positive sign that demand and profit opportunities exist,” Nothard affirmed.

Cox Automotive’s IQ is available now to view here and includes its new and used UK market forecasts and articles from noted industry experts.