UK used car figures highlight VED effect as diesel demand is still strong

21 November 2017

As the UK’s new car market suffers through falling sales, the country’s used car market is also seeing a decline, although not as severely.  

The Society of Motor Manufacturers and Traders (SMMT) has published its used car sales figures for Q3 2017, which see the market dip by 2.1% compared to the same period in 2016. A total of 2,102,078 vehicles changed hands in the three months July to September.

In Q3 more motorists also took advantage of the wide range of alternatively fuelled hybrid and electric cars now entering the second hand market, with registrations rising 17.0% to 25,196 units. Pure electric vehicles, in particular, proved increasingly popular, with sales up 66.4%.  

However, despite the new car market in the UK showing a decline in sales of diesel vehicles, with the technology down by 14.9% year-to-date, the used car market is showing a different trend. Demand for the fuel rose by 4.2% in Q3, while petrol sales fell 6.5%. Overall, more than 2.5 million used diesel vehicles have been sold in the country year-to-date.  

This could highlight that it is the change in vehicle excise duty (VED) introduced in the UK in April 2017 which is the main cause for the decline of diesel on the country’s roads. Vehicles registered before April 2017 are subject to the country’s older excise rates, based on CO2 emissions. This means that those using the fuel pay a more financially favourable tax rate, some vehicles costing as little as £30 (€34) per year. The used car market shows a demand for diesel vehicles does still exist.  

Year-to-date, the market remained at record levels after a bumper first quarter, with more than 6.3 million buyers opting for a used car in the first nine months of 2017, a 0.1% increase on the first nine months of 2016. 

In the latest quarter, superminis extended their reign as the most popular vehicle segment, taking a third of the market (33.6%). However, SUVs and minis were the only segments to show growth, up 11.2% and 1.3% respectively, reflecting new car market trends. 

Mike Hawes, SMMT chief executive, said: ′The used car sector remains in good health as motorists take advantage of some great deals on cars – including some of the latest low emission diesel and alternatively fuelled vehicles. However, as demand in the new car market cools, used car sales normally follow suit unless there are significant tax changes affecting the new car market. Fleet renewal is the fastest way to improve air quality, however, so we need economic and political certainty to boost buyer confidence and keep both markets moving.‘ 

Meanwhile, the latest report by Dataforce shows that the British True Fleet Market remained in a slump during October, representing the seventh consecutive month of decrease compared to the previous year. The fleet segment was down by 7.2%, which has resulted in a cumulative decrease of 4.5% after ten months.