The UK’s used car market will see only modest growth in the coming years, and face a number of challenges, according to Cox Automotive.

Based on its latest analysis of the market the global automotive retail specialist predicts that based transactions will rise from 7.4 million in 2024 to just under 7.9 million by 2027.

Baseline projections for 2025, shared in Cox Automotive’s Insight Quarterly (IQ), indicate 7,458,356 used car transactions, a marginal 0.3% increase on 2024 levels. According to Cox this slow increase is indicative of a market still lagging behind pre-pandemic trends and constrained by economic pressures and ongoing supply limitations.

Commenting on the analysis, Cox Automotive Insight director Philip Nothard said that while demand for used vehicles remains stable, the UK car parc is contracting, and overall vehicle registrations and transactions continue to fall short of peak levels seen from 2002-2008 and 2014-2019

“Our forecast highlights the enduring appeal of used vehicles but also emphasises the reality that this sector, like much of the broader automotive market, faces ongoing pressures as consumer priorities shift and the vehicle landscape continues to adapt,” Nothard added.

‘New energy vehicles’ (NEVs) are heavily influencing the market, as more such vehicles become available and manufacturers change their production strategies as a result and react to such political rpessures as the ZEV mandate in the UK. As a result the availability of traditional internal combustion engine (ICE) vehicles is expected to decline.

According to Cox there is still a long way to go in persuading more dealers onboard to stock EVs, but those that have become early adopters are seeing certain models holding their value and even moving faster out of forecourts than some of their combustion-engined equivalents.

The forecast also predicts significant growth in NEV adoption within the used market, battery electric vehicles (BEVs) having increasedg their share of transactions by more than 50% in early 2024.

Despite this growth, however, ICE vehicles still dominate, especially given consumer concerns around EV charging infrastructure and affordability. Cox does predict that BEV registrations in the used market will grow from 21% to 34% by 2027, indicating a slow but steady shift in consumer preferences.

Other pressures on the used market include economic conditions with affordability a primary factor shaping consumer decisions – many buyers view used cars as a more financially viable alternative to higher-priced new vehicles.

“Our data suggests economic pressures will continue to influence consumer behaviour,” Nothard said. “While new car prices rise, affordability concerns and a strong demand for lower-cost alternatives are likely to keep used car sales steady. With ongoing supply constraints and a shrinking car parc, we expect vehicle values for certain in-demand segments, particularly ICE, to remain high.”

The decline in the UK’s car parc is expected to be around 4.47% in the next three years, presenting new challenges for a sector that must balance dwindling ICE inventory with the growing demand for used EVs. OEMs producing fewer ICE models will mean consumers having fewer choices within the traditional fuel category, driving competition for high-quality used vehicles.

Cox Automotive’s data indicates a critical tipping point for the UK used car market by 2027, but a gradual return to pre-pandemic levels of sales – as NEV options become more accessible and consumer interest continues to build, demand for used cars of all types is likely to remain strong.

Nothard believes the affordability and appeal of used cars will play a central role in the UK’s transition to an electrified future. “The market is evolving, but the sector’s resilience is clear. Those in the sector who proactively adjust to shifting consumer preferences and stock needs will be well-positioned to thrive in a transformative market. But it certainly won’t be plain sailing ahead.”