The used car market has returned to a more familiar rhythm after several turbulent years, but dealers still need to tread carefully. Margins remain available, but success now depends on disciplined buying, accurate pricing and understanding where genuine retail demand sits.
The latest Solera cap hpi market overview shows a market that is cautious rather than weak. Used values at the benchmark three-year, 60,000-mile point fell by 1.2% heading into May, broadly in line with normal seasonal trends. Retail demand remains stable, wholesale conversion rates are holding up and average days to sell have improved to around 27 days.
Affordability continues to dominate buyer behaviour. Consumers remain focused on value, pushing demand towards lower and mid-priced vehicles with sensible running costs and competitive monthly payments. Dealers also need to ensure used stock compares favourably against increasingly competitive new-car finance offers.
However, not every affordable sector is performing strongly. Superminis, despite their appeal in a cost-conscious market, were the weakest-performing segment in April, with values down 1.9%. Reduced new-car supply following the withdrawal of models such as the Ford Fiesta is tightening stock availability, increasing the importance of careful buying. Low-mileage, economical and automatic examples remain the safest bets.
SUVs remain dominant, accounting for nearly 45% of sold data received by cap hpi, but the market is becoming more fragmented. Smaller SUVs experienced steeper value declines than larger models during April, while some mainstream models saw significant pressure. Dealers need to avoid overexposure to over-supplied stock and remain competitive both locally and nationally.
Diesel continues to soften, with slower retailing times and increasing pressure on values as buyers become more cautious about fuel costs and long-term ownership.
By contrast, used EV demand is showing signs of improvement. EVs are now among the quickest fuel types to retail, wholesale activity is increasing and some models have started to recover value. Hybrids remain one of the strongest and lowest-risk sectors, combining strong retail demand with fast selling times.
In today’s market, dealers can still achieve strong margins, but only through disciplined buying, accurate pricing and close attention to changing consumer demand.
Chris Plumb is the head of current car valuation for Solera cap hpi.
