Used car market showing signs of improvement

There are positive signs for the fleet remarketing sector with the latest sales data suggesting an improving used car market.

Analysis from Cap HPI shows that the used market in January experienced “significant” improvement compared to December. 

The trend gathered positive momentum as demand increased as the month progressed, it reports.

Values at the three-year, 60,000-mile benchmark show a minimal decline of just 0.1%, translating to an average decrease of just £60. 

This 0.1% average movement is the joint fourth strongest on record for February going back to 2012 when Cap Live was introduced. 

Jeremy Yea, senior valuations editor at Cap HPI, said: “Had the monthly deadline been a few days later, it is quite possible that this monthly change could have been flat or even a slight positive. 

“Cap Live subscribers may see this in the figures in the coming days and may have already noticed it in the brief period between the drafting of this overview and the start of February.”

He added: “It’s a bit of a myth that values go up in January, as since the introduction of Cap Live in 2012, the average monthly movement for this period is a negligible -0.2%. 

“Only three years since 2012 have resulted in positive February monthly movements - 2012 (0.5%), 2020 (0.6%) and 2023 (0.1%) - with the weakest being a drop of 0.7% back in 2019.”

At the one-year mark, values declined, slightly surpassing the three-year benchmark with a drop of 0.3%, equating to about £150. 

This decrease in values for younger cars can likely be attributed to appealing new car offers and considerable discounts on pre-registered models, says Cap HPI. 

The five-year and 10-year age points experienced increases of 0.4% (or £10) and 1.6% (around £60), respectively. The condition of these older cars has been key. 

If the grading and mechanical assessments have been positive, it’s likely that the average movements have significantly exceeded the most desirable and well-maintained examples sold this month. 

At the three-year mark, diesel emerged as the strongest performer this month, with a 0.2% increase, or around £40, while hybrids remained flat overall. 

Petrol saw a marginal decline of 0.1%, or approximately £60, and plug-in hybrids dropped by 0.6%, or around £175. 

Electric vehicles experienced the biggest decline this month, falling by 1.1%, or roughly £240. 

Yea explained: “BEVs (battery electric vehicles) at the three-year benchmark have experienced a little more pressure throughout January following several months of stability. However, this trend is likely to rebound throughout February due to being the fastest-selling fuel type for many retailers.

“January ended broadly in line with our short-term forecast position and overall expectation. It has been a good solid month for most retailers, auctions and wholesale vendors, but with some adverse weather perhaps affecting a more positive outcome. 

“February will likely continue on a positive trajectory, with demand increasing as stock becomes thinner on the ground the closer we get to March.”

Following its first market meeting for 2025, the National Association of Motor Auctions (NAMA) also noted the positive start to the year. 

NAMA spokesperson, Paul Hill, said: “From a wholesale standpoint, the market is demonstrating strong and promising signs as it enters the new year.”

NAMA members are reporting that the car market is in a strong and healthy position. Overall price movement is negligible with prices generally level, however, BEVs have shown slight weakness, down by 0.7% with PHEVs fairing slightly better with values down by 0.5%.

Older, higher mileage vehicles have improved on their year-end position. The current positive momentum is expected to continue over the coming months through NAMA also says that vehicle condition remains a key factor in ensuring strong performance.

Hill added: “The LCV segment has seen a mixed performance, with the older market seeing some challenges. Some of this may be attributed to the upcoming Benefit-in-Kind tax changes for double cab pick-ups in April 2025.

“BEVs have also seen a weaker performance, down by 0.7%.

“Despite some challenges, the market has started the year on a positive note, with a strong overall performance in January 2025. We anticipate this positive momentum to continue through the first quarter.”

AFV sales soar 65% in 2024 on Dealer Auction

In an annual round-up of Dealer Auction’s EV Performance Review (EVPR), it shows that trade-to-trade sales on alternative fuel vehicles (AFVs) jumped by 64.9% in 2024 compared with 2023.

Further demonstrating the increasing interest in hybrid and EVs, the digital marketplace saw 51,259 bids received on AFVs and 204,058 ad views – year-on-year increases of 25.83% and 16.6% respectively.

Although AFVs still represent a small proportion of the market – 5.6% on the Dealer Auction platform – the data illustrates that more and more dealers are keen to tap into the profit potential of these models. 

In fact, the proportion of electric vehicle sales doubled from 0.43% to 0.88% in 2024, while the proportion of hybrid increased from 2.96% to 4.72%. Meanwhile, the proportion of diesel models fell by 4.16% during 2024.

Dealer Auction’s marketplace director, Kieran TeeBoon, said: “The EV Performance Review continues to yield intriguing insights about an evolving used market. The data shows strong stats for used AFVs in 2024 versus those traded between dealers 12 months ago.

“The remarkable 64.9% jump in trade-to-trade AFV sales underscores the shift in consumer demand toward hybrid and electric vehicles.”

The age and mileage of the AFVs increased slightly in 2024: the average age increased by 3% to 4.3 years old, while the average mileage increased by 11% to 38,103. 

Although, notably in December 2024, the average age fell to 3.1 years, showing the importance of looking at the most recent data as well as broader trends.

While the average retail margin for AFVs remained broadly unchanged from 2023 (falling by 2.2% to £2,870), Dealer Auction says that this is indicative of the wider UK cost of living crisis and the impact on the automotive industry as a whole.

Homing in on the top performing trade-to-trade models of 2024 on the Dealer Auction platform, hybrids continued to dominate the AFV market – occupying all the spots in the top 10 vehicles by CAP performance and top 10 by average gross margin, and 90% of the top 10 by volume sold. 

Indeed, the Nissan LEAF is the only EV to feature anywhere in the rankings – remaining one of the best-selling electric cars on the UK market. 

The hybrid Lexus RX took first place for average gross margin, offering dealers a potential margin of £3,525. 

But with the exception of this model, mainstream brands were the ones to watch for profit potential, making up 90% of the top 10 – including the Hyundai Tucson coming in second place (£3,415) and the Toyota RAV4 in third (£3,058). Indeed, five Toyota models made the list.

Proving its popularity once more, the best-selling used AFV of 2024 was the Hyundai Tucson, followed by the Toyota Yaris and Mitsubishi Outlander – the latter also being the fastest seller of the top 10, selling in 34.7 days on average.

When it came to CAP performance in 2024, Toyota reigned supreme, taking the top three spots and commanding 50% of the top 10 overall. 

The top spot was claimed by the Auris, with a CAP performance of 102.2%, followed by the RAV4 (102.1%) and C-HR (101.4%).

TeeBoon concluded: “This annual round-up is a brilliant indicator of long-term trends, with various models commanding a strong CAP performance and potential margins. 

“Overall, 2024 has been a strong year for the used AFV market, reflecting the growing appetite for greener, more sustainable options in the marketplace.”