Forecasts revised for new car market as deliveries increase

New car registrations are expected to exceed previous estimates, while the used market continues to track towards surpassing seven million transactions this year, new analysis from Cox Automotive suggests. 

Overall sentiment about the new car market has been boosted by 2022’s surprisingly strong performance and confirmation that Q1 of 2023 continued this positive trend.

As a result, Cox Automotive’s revised baseline forecast for the full year predicts it will end 2023 with 1,942,667 registrations, a 13.5% lift on last quarter’s forecast of just over 1.7 million.

The updated forecast indicates we’ll see 476,691 new registrations in Q2, a 16.4% improvement on the forecast published at the start of the year (409,378), while Q3 is on track to end with 558,803 new vehicle registrations.

Cox Automotive’s used car forecast predicts that the UK market will see 7,096,932 transactions during 2023, a 3.2% year-on-year improvement.

Q2 is expected to deliver 1,832,842 transactions, while Q3 is predicted to see 1,866,540 transactions.

Published in Cox Automotive’s latest AutoFocus insight update, the forecasts consider a baseline, upside and downside scenario for each market.

The baseline is, the company believes, the most likely scenario to materialise.

Philip Nothard, Cox Automotive’s insight and strategy director, said: “It’s heartening to once again unveil an upbeat sector forecast.

“So many challenges that have dominated our commentary on new and used markets for successive quarters are finally fading.

“That’s not to say that the road ahead is free from obstacles and the visibility is crystal clear, but we progress towards the halfway point of 2023 in a better position than many dared hope.”

He continued: “Our revised new vehicle forecast reflects the confirmation of 2022’s registration figures and evidence gathered throughout Q1 that manufacturers are returning to a ‘push’ market.”

More than 85 million cars and LCVs were manufactured in 2022, a 6.08% year-on-year increase and a drastic improvement on the lows of 77 million seen in 2020.

“With supply chains now approaching where they need to be, manufacturers can once again ramp up production and define the volume of vehicles that are supplied to the market, as opposed to the demand-driven ‘pull’ market we’ve experienced since the first lockdown,” added Nothard.

The new car forecast also accounts for the clearer picture the sector now has of the two most influential dynamics within the new market: the influence of EVs as a proportion of new registrations and the quicker-than-anticipated emergence of new Chinese brands in the UK.

The net result is a 20.4% year-on-year increase, which, for context, remains 15.9% behind pre-pandemic levels.

Nothard said: “We’ve reviewed all the relevant data points and remain confident in our existing forecasts.

“It would be understandable to look at what’s happening with new registrations and conclude that this performance will naturally translate over to the used market. Still, we must remember that most of today’s new vehicles will not be seen in the used market until 2026, and possibly longer still if predictions of fleets and private buyers retaining vehicles for longer prove to be accurate.

“We must also remember that the used market continues to be impacted by huge volume lost over the past three years; some 42 million fewer vehicles were made globally in this period compared to the previous three years.

“This equates to 2.3 million vehicles that should’ve entered the UK’s used market around now but never did. Nevertheless, the fact that we’re looking at completing more than seven million used car transactions this year is a very positive position to be in.”

The full details of Cox Automotive’s latest new and used car forecasts can be read in issue nine of its AutoFocus insight update.