Used car market facing severe supply challenges
Auto Trader has warned that the UK used car market will face significant supply challenges in 2026.
The sector has begun the year strongly, with strong consumer demand, higher prices and increased sales volumes.
Its Retail Price Index found that the average price of a used car was £17,294 in January, which represents a 0.2% year-on-year increase and a 0.1% uplift on December. Growth was driven by a nine per cent price rise in the 10-15-year-old age bracket to £6,949.
Meanwhile, the average price of used petrol cars rose for the 10th month in a row to £15,039, while used electric vehicle prices fell 7.2% to £23,678.
However, Auto Trader has said that while the headlines are positive, retailers are facing two years of intense competition for older stock as the pandemic production gap is now moving through the market. It expects the volume of 5-6-year-old cars to drop 25%-30% in 2026 compared to 2024. The situation is expected to worsen in 2027, when the fall could reach 35% for cars aged 5-7-years.
Supply challenges
Marc Palmer, head of strategy and insights, said: “The metrics for January tell a clear story: the market is healthy, buyers are back in force, and stock is selling. But while the year has started with momentum, it’s important we keep our eyes on the road ahead. The pandemic gap is moving through the market, and we expect a sharp drop in the availability of 5-7-year-old vehicles over the next couple of years.
“We’re already seeing some retailers outperform the market by adapting to these shifts, but the pressure is only set to grow. The demand is there, and on our platform the audience is there, but the cars might not be the ones you’re used to selling.
“Success in 2026 will come to those who use data to identify the new pockets of profit, diversifying into different ages and fuel types, rather than waiting for the old supply chains to return.”
