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HEADLIGHTS by heycar

Empty new car showroom

Go Big or Go Home

Lead data for January shows buyers are gravitating towards larger and newer cars

SUVs, MPVs, and estate cars advertised on heycar saw the biggest increases in leads in January, with increases of between 50- and 60%. They rose by 57.4%, 51.5%, and 57.9% respectively, which suggests that used car buyers are seeking out larger models. 

After declining towards the end of the year, leads increased universally in January, but rises were generally not as significant for small and medium-sized models. Leads for hatchbacks were up by 40.8%, coupes by 22.8%, and saloons by 19.9%. 

Convertibles were the exception to the rule because their January leads rocketed by 96.7%, which is unusual for cars that are traditionally less desirable in winter. However, they are also the smallest group by body style (they accounted for 2% of January leads; SUVs were 43.5%), which makes them more susceptible to ups and downs than more popular types of cars. They also experienced the sharpest fall of any body style in the end-of-year slowdown, when prices fell by 33.5% between October and November. 

Four of the top five cars by number of leads in January were SUVs. The Nissan Qashqai – also the best-selling new car of 2022 – took to the top spot, with a 115% month-on-month increase, followed by the Kia Sportage (up 103.2%), and the Hyundai Tucson (up 56.3%). The Ford Focus (up 81.5%) bucked the trend in fourth, while the Range Rover Evoque (up 8.5%) – always popular among heycar users – was fifth.

The total number of leads dealers received from heycar illustrates the downturn at the end of 2022, but a more promising start to this year. They fell by 22.7% in November and by 26% in December, but rallied in January with a 47.1% increase, leaving them up 6.1% year-on-year. 

Cars registered from 2016 to 2019 still account for the majority of stock and leads due to their greater availability, but there was a noticeable shift towards newer models in January. Leads increased across all model years from 2016 onwards, but the percentage increases were stronger for cars registered between 2019 and 2022, with month-on-month rises of between 77% and 102%. In contrast, leads for cars registered between 2016 and 2018 rose between 41% and 59%. 

It may not be the case in the new car market, there is still plenty of appetite for diesel among used car buyers. Splitting our January leads by fuel type, diesel accounted for 42.1%, next to 45.4% for petrol. Hybrid and electric models were 9.8% and 2.6% respectively. 

Key market stats 

  •  50-60% rise in January leads for SUVs/MPVs/estates
  • Leads up 77%-102% for 2019-2022 model years 
  • Nissan Qashqai was January’s most popular car with leads up 115%
  • heycar January leads up 6.1% year-on-year 
  • Month-on-month leads up 47%
  • Petrol still dominates with 45.4% share

Note from the CEO

"Consumers have begun 2023 with a sense of caution and trepidation – so dealers can be forgiven for feeling the same. Few imagine this year will settle into an easy economic ride and expect the unexpected seems a reasonable mantra for the times in which we live and work.  

The industry would do well to stay on its toes and understand that the post-lockdown used car trading boom of 2021 and 2022 – fuelled by so-called ‘accidental savers’ who couldn’t spend while cooped up – is no longer in session.  Look closely, and there are signs for optimism. The Bank of England may have increased interest rates to 4% at the beginning of February, but its simultaneous nod to this being the end of this rate-rise cycle, and that a recession may be shorter than previously expected, are good omens.

One thing we can cling to – at least for the time being – is the strength of used car prices. Supply has increased a little for certain brands and vehicle types, and it is no secret that values of electric vehicles have dropped, but given the time elapsed since the beginning of the pandemic, three-year-old/60,000-mile used cars are not about to increase in number. That, in itself, is a challenge for dealers, but we can at least bank on a good return from most cars on the forecourt."

Karen Hilton, Chief Executive Officer, heycar UK

Lie of the Land

We examine the outlook for the wider economy, with an eye on consumers’ spending power 
  • January inflation at 8.8%; forecast to fall to around 4% this year
  • GfK Consumer Confidence Survey at ‘near-historic low’ of -45
  • Bank of England predicts ‘much shallower’ recession

Our lead story shows that interest from used car buyers bounced back in the first month of the year and purchases were once again in consumers sights after a year-end decline. A certain amount can be attributed to the used car market’s traditional end-of-year slowdown, but wider economic forces are nonetheless puppeteering buyers. 

UK inflation stood at 8.8% in January, according to the Consumer Price Index (CPI), down from its 32-year high of 9.6% in October. While the drop is welcome, it is still 6.8% higher than the Bank of England’s 2% target, and almost two years of steep rises have taken their toll. 

GfK’s Consumer Confidence Survey fell by three points to -45 in January – down from -19 a year ago – and the organisation said its results were “still bumping along at near-historic lows”. The survey, which quizzes members of the public about their personal financial situation and the wider economy, reported falls across five of its six metrics. However, the one metric that increased, albeit by two points to -27, was respondents’ predictions about their future financial situation over the coming 12 months.    

A further glimmer of hope is that the UK avoided a recession in 2022. Office for National statics figures published in February showed that GDP flatlined in the final quarter of last year, following a 0.2% fall in quarter three. However, the figures also revealed that the economy contracted in December, with a drop of 0.5% due to rail strikes and poor weather, while fourth quarter GDP was still 0.8% below pre-Covid levels. 

The Bank of England still believes a recession is on the cards, but not to the extent that it forecast in November, when it suggested the UK was in for its longest one ever. Although it increased the base rate of inflation by 0.5 percentage points to 4% on 4 February, it simultaneously pointed to “a much shallower projected decline,” and suggested that CPI inflation (the one we all feel) could more than halve to around 4% towards the end of the year.

While 2023 is hardly shaping up to be bumper for business, there are signs to suggest that used car buyers might have a little more in their pockets than previously predicted.  

Fuel for Thought

Are used electric car prices now more acceptable to buyers? 
  • EV leads fell by 17.25% in January   
  • Average electric car was £26,111
  • Average diesel car was £27,416
  • Oldest EVs are the most consistent and the best value

It is no secret that used electric car prices have fallen dramatically, and our data shows an average 17.25% drop in January prices for models registered between 2016 and 2022. A universal increase in stock was a big part of that, as is the cost-of-living crisis. The Office for National Statistics reported that UK electricity prices rose by 65.4% in 2022, and in January, the RAC said the cost of using public rapid and ultra-rapid chargers had risen by 50% since May, so if nothing else EVs are just more expensive to run than they used to be. 

Used examples have typically been costlier than internal combustion-engined equivalents which is another reason buyers have been tempted back towards the latter, but January’s drop in prices brought them more into line. The average value of a diesel used car from 2016 to 2022 advertised on heycar in January was £27,416, compared to £26,111 for an electric equivalent. This could point to a more natural level of pricing for second-hand electric cars, after a long period of inflated values. 

Newer EVs have been more consistent in their losses. Values of cars registered between 2020 and 2022 fell consistently across the final quarter of last year and into January, while 2016 to 2019 models fluctuated. 

Our quarter four Headlights report highlighted the strength of older EVs, because prices of models registered in 2017 were up 97.8% year-on-year in October. They were not immune from January’s reductions, when prices fell by 26.1%, but some of the oldest EVs advertised on heycar saw the most consistent prices across the final quarter of 2022. Values of cars registered in 2016 fell by 12.8% in January to an average price of £11,653, but that was 3.9% higher than their average October value, which suggests that cheaper, older EVs, such as Nissan Leafs and Renault Zoes, may be less subject to the recent downturn in EV prices and represent better value for used car buyers.