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The UK used car market is set to see 4% year-on-year sales growth in 2023, with a steady improvement during the second half of the year, according to Cox Automotive.
The data firm has published new forecasts for the sector, with its baseline prediction being a relatively slow recovery based on increasing consumer and business confidence, with minimal notable shifts in demand or market dynamics.
It is predicting that consolidation and acquisition activities in the wider vehicle industry will positively impact transaction numbers in the used sector, resulting in a more streamlined and efficient marketplace.
Cox's new forecast, published with its latest AutoFocus insight update, is for 1,866,540 used car transactions to take place in Q3, with this figure softening to 1,607,517 in Q4, equalling a full-year total of 7,154,047.
The firm has noted that the Q1 total of 1,847,149 was a slight improvement on its forecast of 1,790,034, but said that the 96.8% accuracy of its prediction instilled confidence in its full year forecast across different market scenarios.
Despite the forecast year-on-year growth, if Cox's prediction proves to be accurate, 2023 will still see a number of used car transactions 3% below the average pre-pandemic figure, with the effects of new car production difficulties in recent years continuing to be felt.
The firm said factors including global economic conditions and energy-related issues were continuing to act as obstacles to overall growth, and that therefore a more substantial recovery was not expected until early or mid-2024.
It added that retail pricing remained unaffected by the rise in interest rates and pressures on household expenditure, maintaining consumer pricing stability.
Cox Automotive insight and strategy director Philip Nothard said: "The global loss of 42 million new vehicles in production has permanently impacted the future composition of the used market.
"However, our analysis points to a steady improvement in the UK sector for this year, which can be partly attributed to production cycles moving back to near normality.
"It nevertheless remains a changing landscape and the impact of supply and demand on valuations in the used sector has become increasingly evident in recent months."
Nothard added that concerns about a potential 'cliff edge' in used vehicle values should diminish once the economy stabilised.
However, he did warn that the current state of the used battery EV market could pose a potential risk to the sector.
Nothard said: "While 64% of franchised dealers stocked BEVs as part of their used vehicle inventory in 2022, just 11% of independent dealers did.
"This creates uncertainty around the pricing and availability of pre-owned electric vehicles, which could lead to cautionary buying behaviour from both retailers and consumers.
"By the end of 2023, more than a fifth of less than one-year-old vehicles in the UK parc are expected to be a BEV, and this figure is projected to increase to 41% for one to three-year-old cars by 2027.
"To keep pace with this rapid market shift, the sector must prioritise education, knowledge-sharing, and legislative measures to support the ownership and stocking of pre-owned electric vehicles."
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