The UK used car market recorded 6.3% year-on-year growth last month, attributable to a 5% rise in dealer stock, according to data from INDICATA.

Following a drop in sales by 1.8% and 3.3% in July and August respectively, small improvements to supply throughout September helped to fuel growth in the industry.

Despite improved stock levels for the 36-month leasing sector, this did not translate to increase stock turn and sales volumes remained flat.

The 12-month-old segment saw a 29% increase in stock turn, highlighting the significant supply shortage, which in turn is driving up prices.

The decision of numerous OEMs to reduce pre-reg and demonstrator activity has further led to a 43% year-on-year fall in sales volumes. The older 60-144-month segment is also facing inadequate stock.

A supply shortage of both diesel and petrol is attributable to high stock turnover, said INDICATA, whilst EVs and hybrids have reported 108% and 55% year-on-year sales growth due to improved availability. Across the whole industry for the month of September, used car prices increased by less than 1%.

If supply continues to grow, October will be a crucial month in determining whether demand and prices stay consistent.

Jon Mitchell, Autorola’s group sales director, explained the trends: “Dealers are showing signs of buying used cars more sparingly as we enter October to avoid being left with cars on their forecourts that they have paid top prices for. That slight cooling in demand matched with higher supplies of used cars coming to the market may mean a market correction is already heading for Q4.”

Mitchell commented: “Used car activity has been very strong across the board since June, but supply has not kept up with demand until September.”

The data also revealed that the UK continues to struggle behind the rest of Europe, with total average sales up 18.4% across the 13 European markets.