Auto Trader predicts that the U.K. new car market will revert to a ‘push’ model in 2024 due to a combination of factors, including slowing retail sales, new regulatory targets and competition from new entrants.

It expects demand for used cars to remain strong in 2024 but cautions dealers to use data to avoid under pricing cars. Auto Trader’s data found there are currently more than 47,000 used cars being advertised by around 8,000 retailers on Auto Trader that are priced under their true market value, equating to over £32.7 million in missed profits or over £4,000 per retailer.

Auto Trader predicts that in 2024 there will be a 4% increase in new car registrations, taking the total to 1.97 million registrations. It anticipates ‘robust’ demand for used cars, but growth will be stalled by supply pressure, so it expects sales to rise from an estimated total of 7.17 million to 7.24 million in 2024.

The company said it expects retailers to offer discounting and financing options to stimulate consumer demand, particularly for electric cars. A strict ZEV mandate requires 22% of all brand sales of new cars to have zero emissions or be fined £15,000 ($19,000) for every non-compliant vehicle sold.

This, according to Auto Trader, is a problem for OEMs as the current average share of EV sales across brands is around 16%, and for some it’s as low as 3%. Auto Trader pointed out that EV sales in November were 29% below the level seen in 2019, accounting for just 10% of all retail sales. This, Auto Trader said, “underlines the need for more offers to stimulate demand in the market next year.”

The company said that despite the economic pressures U.K. consumers are facing, it expects strong demand for used cars in 2024, with a small uplift in sales. The main pressure to meet demand comes from supply constraints linked to “the 3 million ‘lost’ cars that weren’t sold between 2020 and 2022.” Current stock levels on Auto Trader are up just 2% on December 2022, with “significant variations across different market segments.”

This market trend means there is a big rise, 32.2%, for cars aged up to a year old, but decreases for cars aged 1-3 and 3-5 years, down 10.5% and 7.3% respectively.

Auto Trader said demand for used car demand was up 10.7% on December 2022. Auto Trader said the strong market is reflected by the speed of used car sales, 32 days in November, consistent with this time of year and a 4.7% increase in sales at the end of Q3.

“We’ve seen record breaking levels of engagement on our marketplace in 2023, both new and used sales have increased, and with car buyer sentiment remaining positive, we’re hopeful for another robust year for demand and overall transactions,” said Auto Trader commercial director Ian Plummer.

“Although new car retail faces uncertainty, manufacturers have been active in stimulating consumer demand, which we’re already seeing play through on our marketplace, with 16% more new car enquiries being sent to retailers.”

 

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