Why 2024 is looking like the year of the used car
April marked 21 consecutive months of growth for new car registrations, pushing the year-to-date total up by 8.4%, according to the Society of Motor Manufacturers and Traders (SMMT).
This sustained period of growth has just prompted the trade body to revise upwards its full year forecast to 1.98 million units.
While this is welcome news for the recovering market, demand continues to be driven by fleets, as the cost of living crisis and high interest rates continue to limit the buying power of private buyers.
However, the used car market is also going through a period of recovery, with franchised retailers ideally placed to serve the motoring needs of in-market consumers.
Used car sales up
Last year, despite rising wholesale values and retail prices caused by supply shortages, the used car market grew by 5% to 7.24 million units. Cox Automotive is currently forecasting a further rise this year of up to 7.7 million transactions, which will be a welcome 4% increase of the pre-pandemic average.
Sales of used cars certainly got off to a flying start this year. The market grew by 6.5% Q1 with 1.96 million units finding new owners, the strongest start to a year since pre-pandemic 2019, according to the SMMT.
The market has now been growing for 16 consecutive months, on the back of improved supply into the new car market generating higher volumes of used cars, especially with businesses and leasing companies replenishing their fleets.
These rising sales will undoubtedly be further boosted by the steady fall in average used car prices which peaked at £18,927 in January 2023, according to MOTORS, and have been steadily dipping most months since then until this April when they increased by 1% to £16,964, a possible indication that we could be seeing a market correction and hopefully greater stability for prices.
All these used car market indicators are good news for retailers.
What the data says
We know from our latest Dealerweb Showroom data, collated from over 1,000 retailers, that demand for used cars is positive, accounting for 57% of enquiries in April, compared to 43% for new cars. There were also small but welcome improvements in enquiries both month-on-month and year-on-year.
Additionally, used car orders accounted for the lion’s share of vehicle sales at 60%, compared to 40% for new.
This followed a solid performance for used cars over the course of Q1 with our data tracking a rate of 31% enquiries to orders, compared to 28% for new cars. While the impact of those falling used car prices only resulted in a 1% drop in order values.
Opportunities for retailers
We believe all these market trends suggest there are opportunities for franchised retailers to increase unit sales and profitability on their digital and physical used car forecourts.
It is no secret that specialist independent retailers and car supermarkets have upped their games in recent years, so for franchised retailers to successfully compete against them they must consistently deliver the high levels of customer service expected by new car buyers to those buying used, even on out of franchise cars. For many it will mean having a clear focus on stocking desirable cars and pricing them competitively.
However, ensuring that you have accurately priced each vehicle can be a time-consuming task, as it involves checking price points nationally and against competitors in your area.
With CitNOW Insights we collect your DMS stocklist and compare it instantly against Auto Trader data, giving you the instant analysis you need to amend your stock to sell.
We automatically provide optimised prices for every vehicle, constantly checking your stock prices every day to ensure your prices are correct from day one; maximising margin opportunities and optimising days to sell time.
The power of enhanced listings
The opportunity to make a strong first impression starts the moment a used car is listed online.
This is where our CitNOW Imaging platform (formerly Auto Imaging) empowers retailers to elevate their inventories with the fast delivery of consistent and high quality digital assets.
In-app AI-powered quality control and real-time guidance on image-taking helps retailers comply with OEM and group standards; while stock feed integrations and APIs allow them to leverage content seamlessly into quick, consistent, online listings.
It can also help reduce the amount of unadvertised stock, days in stock, as well as decrease time to web and provide sales teams with a more efficient overall solution.
The results are enhanced listings that will showcase used stock across dealer websites and marketplaces and help drive buyer engagement.
Making videos more personal
CitNOW was an early advocate in the delivery of video tools to help sales and aftersales teams communicate with customers and our services are being used daily by thousands of retailers across the UK.
CitNOW Sales builds on a customer’s initial online experience and takes the dealership digitally to them. Specifically designed for sales executives to use, it provides an easy way to film, edit and send personalised videos of used vehicles as a response to individual enquiries, creating trust and building lasting relationships.
However, we believe even more can be done with video to help drive used car sales.
By asking customers about their typical usage, the sales executive can provide a highly bespoke video which can focus on anything from size requirements (do they have a family, how old are their children, do they have babies?), internal space needs (will they be using it for the weekly shop, do they have a dog?) to general practicality (how easy is it to park, does it have parking sensors and camera?).
Including this tailored content, along with showcasing the car’s condition, features and previous history, helps build relationships and trust with prospective customers.
Discover more about how Dealerweb Showroom, CitNOW Insights, CitNOW Imaging and CitNOW Sales can maximise the opportunities that exist to grow your used car sales.
