ABM_1 - Flipbook - Page 58
OPINION
RETAIL
Used market steadies
as new sector wavers
→ Philip Nothard is insight and strategy director at Cox Automotive Europe
I
n a year where the new car market
has been rocked by volatility, the
UK used car sector continues to
offer a stabilising force. Central
to this resilience is the ongoing
shortage of three to five-year-old
vehicles, an echo of more than
three million lost new registrations
during the pandemic. This supply gap
has kept values elevated above seasonal
norms while sustaining a high level of
competition in the market.
So, how has the market performed
in 2025 so far? We did see a slight
softening of retail activity in Q2 after
a strong start to the year, as car
supermarkets outperformed franchised
and independent dealers.
The health of the used market has been
evident in intensified auction activity,
with higher throughput and improved
conversion rates, a trend we expect
to continue. Consumers continue to
seek well-presented, affordable stock
amid rising living costs and economic
uncertainty.
Ripples across the sector
The fragility of the new car market is
beginning to spill over into the used
sector. Heavy discounting, tactical
registrations and the influx of nearly-new
electric vehicles (EVs) are changing the
face of the industry.
As manufacturers push to meet Zero
Emission Vehicle (ZEV) mandate targets,
the resulting pre-registrations are
creating downward pressure on young
used EV values. This pressure is already
evident in the data. EVs under 12 months
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AUTOMOTIVE BUSINESS Q4 2025
old have seen a 4% (£4,130) decline in
sold values, while one to two-year-old
EVs have dropped by a staggering 13%
(£8,123). In contrast, internal combustion
engine (ICE) vehicles have remained
relatively stable, with only a 1% decline
for those under 12 months and a 4% drop
for one to two-year-old models.
Regulatory developments are adding
complexity. Changes to Vehicle Excise
Duty, Benefit-in-Kind for PHEVs, VAT
on public charging, and the Financial
Conduct Authority’s (FCA) execution of the
Supreme Court’s decision on commission
disclosure are all putting pressure on
operations.
Retailers today need to be more
agile, informed, and proactive in
managing compliance and customer
communication in the face this
increasingly complex regulatory
environment. Meanwhile, electrification
continues to be both a challenge and an
opportunity for the market.
Volatile residual values add to
uncertainty in a market already unsure
about the long-term viability of EV stock;
however, they do present opportunities
for retailers to refine their inventory and
aftersales strategies. Monitoring battery
state of health, communicating range
and condition clearly, and aligning stock
with evolving consumer preferences will
be key to success in this market.
Digital transformation will underpin
all of this. Investment in remote
appraisals, online remarketing platforms,
and digital retail tools is no longer
optional, it’s essential. Retailers that
embrace technology will be better
