The used car market is seeing higher-than-normal age and mileage increases at a wholesale level as a result of continued supply imbalances, Cox Automotive has reported.

Used vehicle supply imbalances are causing higher-than-normal age and mileage increases at a wholesale level

Data from Manheim’s August auctions shows that as the supply of used vehicles remains constrained by the knock-on effect of new vehicle shortages, the wholesale market continued to be affected.

The average age of wholesale vehicles in August 2022 was just over 104 months compared to just over 96 months in August 2019. However, while the average mileage dropped in August 2020 and 2021, the mileage of 70,000 recorded in August 2022 is similar to that of August 2019.

Average wholesale prices are at a three-year high of £7,283 compared with £6,519 recorded last year.

Cox also noted that in the new vehicle market, retailers are having to diversify their stock profiles to keep their forecourts full. Meanwhile, the leasing sector finds itself in a familiar situation to previous months, with contract extensions and older, higher-mileage vehicles being de-fleeted and funnelled into the wholesale market.

But it said there’s a glimmer of hope across Europe after new car markets finally returned to year-on-year growth. Last month, Germany registered a 3% YoY increase, as did France (+3.8%), Italy (10.1%) and Spain (9.1%).

But markets remain significantly below pre-pandemic levels; with Germany (-36.5%), France (-29.3%), Italy (-20.2%) and Spain (-30.3%) all down on 2019 numbers. Used car sales activity across key European markets also slowed, resulting in a month-on-month decline in sales volumes across Germany (-7.2%), Spain (-12.1%) and Italy (-8.1%).

The UK shares many similarities with Europe’s new car markets. New car registrations reached 68,858 in August, a 1.2% YoY increase (-25.6% on 2019), amid further signs of market stabilisation, while private sales totalled 34,900.

But Cox has warned that the impact of supply chain shortages continues to be felt within new vehicle production, in contrast to the used vehicle market, which enjoys relative stability, with only marginal fluctuations stemming from ongoing supply and demand dynamics.

And it said automotive businesses must keep an eye on the horizon to navigate potential storms.

Philip Nothard, insight and strategy director, said: “With consumer confidence affected by the rising cost of living in the UK, coupled with political changes at the top of government and expected economic struggles on the way, the sector faces a potentially tricky time in the coming months.”

He continued: “The key is understanding the variance between supply levels down to a model and derivative level. Alongside this is the understanding that we are no longer in a period of heavy demand as we were in 2021. Therefore, it is ever more critical to ensure vehicles are advertised with strong imagery and descriptions and that vehicles entering the wholesale market are appraised and valued accordingly.”