Navigating the used car market in 2025: Insights for dealers, OEMs, and fleets

As we enter 2025, the UK used car market finds itself at a pivotal moment. Our latest Insight Quarterly Report (IQ) highlights six consecutive quarters of year-on-year sales growth for the sector, despite ongoing economic pressures. While this indicates resilience, challenges such as supply constraints and affordability continue to persist – so, where do we go from here?

Looking ahead, the used car market will continue to be shaped by electric vehicles entering the automotive landscape, a shrinking UK car parc, and the preferences of cost-conscious consumers.

For dealers, OEMs, and fleet operators, adapting to these automotive trends, is essential to thriving in an increasingly competitive market. In this article, we’ll break down key trends from 2024, while providing actionable steps for businesses navigating the used car market in 2025.

2024 Highlights and automotive trends

Steady demand despite economic challenges

While a slight decline in interest rates has provided some relief for consumers, the hesitation to spend on new vehicles remains prominent thanks to high inflation and continued elevated interest rates.

The affordability of used cars, means they continue to appeal to budget-conscious buyers. However, transaction levels remain below pre-pandemic peaks due to constrained supply, particularly when it comes to high-demand ICE vehicles.

The rise of used EVs

This year saw significant growth in the demand for used EVs, with battery electric vehicle (BEV) transactions increasing by over 50% in early 2024, now accounting for a growing share of the used car market. While currently representing 21% of total used vehicle transactions, our forecast predicts this will rise to 34% by 2027. 

However, challenges remain. Buyers still express concerns about battery longevity, charging infrastructure and affordability, while manufacturers remain concerned about ZEV mandate goals, despite upcoming consultations on the 2030 ICE ban. Until these issues are addressed, the used EV market will struggle to meet expectations. 

Supply constraints are causing a shrinking car parc

The UK’s car parc (the number of cars registered for UK roads) has shrunk by approximately 4.47% over the last three years, reflecting the long-term impact of reduced new car registrations during the pandemic.

Fewer vehicles entering the market means heightened competition for high-quality used stock, particularly among ICE vehicles, which are becoming less readily available due to the pivot towards electrification.

What does this mean for dealers, OEMs and fleet operators?

Dealers should diversify their stock and stay data-driven

One of the key challenges for dealers, is navigating the balance between meeting current demand and preparing for future shifts. The charge towards electrification isn’t slowing down, so it’s essential that dealers futureproof their business sooner rather than later.

However, with barriers like residual values, consumer hesitation and the lack of expertise to sell and service these vehicles, it’s certainly no easy feat. There’s a lot that needs to be done across the industry to remove these blockers, but the truth remains: dealers who don’t get ahead could miss out on a growing segment of the market.

While adjusting to the new world of EVs, dealers also need to ensure they’re maximising profits from ICE vehicles while they can. Their dwindling supply means well-maintained ICE vehicles will remain in demand, offering opportunities for strong used sales and after sale margins.

Finally, flexibility is key with any dealer strategy - but in the current market, it’s more important than ever. Staying on top of trends and leveraging automotive data is essential for success, allowing dealers to optimise pricing, target efforts and keep up with an evolving used car market.

OEMs must support the transition to electrification

As the market heads towards electrification, OEMs play a critical role in preparing the industry to sell, service and buy EVs.

When it comes to used EVs, a key concern is their price depreciation and residual value. Data in our report highlights that to tackle this, OEMs must invest in in-life battery solutions to enhance battery longevity, while educating consumers on technology advancements.

However, there’s also a responsibility to help support dealer adoption via training and support for their teams, while also offering consumer incentives for making the switch.

Fleet operators must balance transition with demand

As OEMs focus on the production of EVs, the demand for high-quality used ICE vehicles remains strong. Fleet operators that maintain ICE vehicles well and strategically time their de-fleeting cycles around demand, can achieve positive returns.

Regarding EV adoption, fleet operators have an opportunity to lead in supplying quality used EVs to dealers and other fleets. However, ensuring battery longevity through in-life battery solutions and highlighting the benefits of EVs when remarketing their fleets, are crucial steps.

As the used car market enters 2025, the automotive industry must remain adaptable and forward-thinking. While ICE vehicles will continue to dominate for now, the steady rise of used EVs signals a shift in consumer preferences and market dynamics.

The success of dealers, OEMs, and fleets will depend on their ability to balance today’s demands with tomorrow’s opportunities. From embracing electrification to navigating affordability concerns, those who invest in innovation, data-driven decision-making, and proactive customer engagement will be best positioned to succeed.

Stay updated with trends and forecasts in our latest Insights Quarterly Report.