A Global Trend: The US and Europe Mirror the UK’s Experience

The United Kingdom’s used car market has achieved a significant milestone, with transactions in the first half of 2025 returning to levels not seen since before the global pandemic. This resurgence, detailed in new data from the Society of Motor Manufacturers and Traders (SMMT), is more than a simple recovery; it is a complex narrative of shifting consumer behaviour, evolving economic pressures, and the emergence of new market dynamics, particularly in the electric vehicle (EV) sector. While the new car market continues to navigate its own recovery, the used car sector has demonstrated remarkable resilience, solidifying its role as a cornerstone of the UK’s automotive landscape.

According to the SMMT, some 4,017,106 used cars changed hands in the first six months of the year, marking a 2.2% increase on the same period in 2024. This figure is just 37,274 transactions shy of the pre-pandemic benchmark of 2019, a year often cited as the last true reflection of a stable automotive market. The data, which shows a tenth consecutive quarter of growth, underscores a market that has not only absorbed the shocks of recent years but has adapted to meet the demands of a new economic reality.

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The Economic Undercurrents: From Supply Chains to the Cost of Living

The journey to this point has been anything but straightforward. The initial fallout from the Covid-19 pandemic saw a dramatic contraction in both new and used car sales. This was followed by a period of unprecedented volatility, driven largely by global supply chain disruptions that crippled new car production. The resulting shortage of new vehicles created a bottleneck that had a profound and lasting effect on the used car market. As new stock became scarce, demand for pre-owned vehicles surged, pushing prices to record highs and altering the traditional depreciation curve.

This period of inflation has now begun to moderate. As new car production has slowly stabilised and the supply of nearly-new vehicles has begun to replenish, used car prices have started to settle. However, the economic legacy of the pandemic, compounded by broader cost-of-living pressures, has created a new set of drivers. For many consumers, a new car purchase remains a substantial financial commitment, with prices having risen considerably over the last decade. In this environment, the used car market offers a compelling value proposition. It provides a means for budget-conscious buyers to access reliable transport without the burden of a new vehicle price tag.

“The UK’s used car market has kept up its strong momentum, as budget-conscious buyers continue to turn to second-hand vehicles,” notes James Hosking, managing director of AA Cars. This sentiment is echoed by others in the industry, who point to the “sweet spot” that used cars now occupy for drivers looking to stretch their money further. This dynamic has seen a particular surge in demand for older, more affordable stock, with cars aged five to ten years old becoming the fastest-selling segment of the market. This shift suggests a fundamental change in consumer priorities, where practicality and affordability are outweighing the desire for the latest models.

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A Global Parallel: The Shared Post-Pandemic Trajectory

The UK’s used car market is not an isolated phenomenon. It is part of a broader, interconnected global trend where major economies are experiencing similar dynamics. In both the United States and the European Union, the used car market is demonstrating remarkable resilience, driven by the same economic forces that are reshaping the UK landscape.

In the United States, high inflation and rising interest rates have made new car ownership more expensive than ever. This has pushed a significant portion of the buying public towards the more affordable used market. Data from Cox Automotive reveals that US used retail sales have increased by 2% compared to the previous year, with inventory levels remaining largely stable. The underlying drivers are identical: consumers are seeking value and are willing to forgo a brand-new vehicle to manage their household budgets. The Manheim Used Vehicle Value Index, a key US wholesale price indicator, rose in the first half of the year, underscoring this robust demand.

Similarly, across the European Union, the used car market is showing a steady upward trend. An analysis from the AUTO1 Group price index, which tracks the monthly evolution of wholesale used car prices, indicated a 5.1% increase in the first half of 2025. While new car registrations in the EU declined by 1.9% over the same period, transactions in the used market have improved in all major regions, including France, Germany, and Italy. This synchronicity across the world’s largest automotive markets highlights the global impact of post-pandemic supply disruptions and the universal shift in consumer sentiment towards value and practicality.

The types of vehicles in demand, however, show some regional differences. While the UK sees strong sales of superminis and small-to-medium cars, the US market remains dominated by larger SUVs and pickup trucks, which are also increasingly popular in the used segment. This reflects deep-seated cultural preferences and driving habits that persist even in the face of shared economic pressures.

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The Greening of the Market: A Tipping Point for Electric Vehicles

Perhaps the most significant and forward-looking trend within the used car market, both in the UK and internationally, is the accelerating momentum of electric vehicles (EVs). While petrol and diesel vehicles still account for the vast majority of transactions—90.1% of the market in the UK’s second quarter—the growth trajectory for electrified models is undeniable. The SMMT’s data reveals that in the first half of 2025, 9.7% of all used cars sold were electrified. This is a dramatic increase from just a few years ago and signals a critical phase in the UK’s transition to zero-emission mobility.

The growth is not uniform, but it is pronounced. Battery electric vehicles (BEVs) saw the strongest rise, with transactions up 40% in the second quarter. This surge is being driven by several key factors. The first is the sheer increase in the number of EVs entering the market. The volume of ex-lease and ex-fleet models is now providing a steady and growing supply of second-hand electric cars. The second is the crucial element of price parity. As James Wilson, chief operating officer of used car marketplace Motorway, points out, “price parity between EVs and ICE (internal combustion engine) cars has arrived.” This means that for a growing number of models, a used electric car is now a financially viable alternative to a petrol or diesel equivalent.

This convergence of affordability and availability is dismantling one of the primary barriers to EV adoption. As the residual values of used EVs stabilise and running costs remain significantly lower than traditional internal combustion engines, the financial case for switching to electric is becoming increasingly robust. However, this growth is not without its caveats. Industry leaders, including SMMT chief executive Mike Hawes, are quick to stress that the long-term success of the used EV market is inextricably linked to the health of the new car sector and the pace of investment in the national charging network. A sustained pipeline of new EVs is essential to ensure a continuous supply of used models in the years to come, and a reliable, ubiquitous charging infrastructure is vital to building consumer confidence.

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A Tale of Two Markets: New vs. Used

The contrast between the used and new car markets is stark. While the used car sector is celebrating its near-return to pre-pandemic form, the new car market remains well below its 2019 level, despite a modest 3.5% growth in the first half of the year. This disparity highlights the differing pressures and motivations at play. New car sales are still being hampered by lingering supply chain issues, as well as a consumer base that is more hesitant to commit to large-scale purchases in an uncertain economic climate.

The data suggests a bifurcated market, where fleet and business purchases are propping up the new car sector, while private consumers are overwhelmingly opting for the proven value of a used vehicle. This is a crucial distinction for policymakers and industry analysts. The resilience of the used market serves as a vital anchor, absorbing the volatility of the new car sector and ensuring that the UK’s automotive industry as a whole remains robust.

In conclusion, the UK’s used car market has not just recovered; it has fundamentally reset. It has adapted to the forces of post-pandemic disruption and a cautious economic environment. Its strong performance, mirrored in other major global markets, highlights its role as a leading indicator of consumer sentiment and a primary engine of automotive recovery. The continued growth in used EV transactions further suggests that this market is a crucial battleground for the transition to electric mobility. The data tells a clear story: the used car market is a powerful and adaptable force, providing a vital direction for the future of the automotive industry.