More new cars are reaching the UK's roads following last year's supply disruptions, but not enough to bring down prices for used vehicles.

That is the underlying message in today's trading update from Vertu Motors, the UK's fourth-largest car dealer by turnover.

Vertu, owner of the Macklin Motors brand in Scotland, raised the volume of new car sales by 10.8% during the three months to the end of May as the acquisition of Helston Garages Group helped it outstrip UK market growth of 8%. Profit margins on new vehicles remained strong at 7.9%, just a shade off of where they were a year earlier.

Used car volumes fell by 5.9% on a like-for-like basis amid "on-going supply constraints" but the average selling price per unit grew by 3.4% on a like-for-like basis to more than £21,000, reflecting these market conditions.

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This is no doubt why research released earlier this week found that dealer optimism about the used car sector has reached a 14-month high as 2023 hasn't turned out as badly as many in the industry feared at the beginning of the year.

Figures compiled by motor finance company Startline revealed that 64% of dealers feel positive about the market, up sharply from 27% in May and 20% in April. 

Asked whether they expected stock supply to improve in the next 12 months, 55% of dealers agreed this was likely.

Improved new car production was cited as the biggest driver of this trend, mentioned by 43% of those questionned. Indeed, Vertu noted this morning that the Society of Motor Manufacturers and Traders (SMMT) has increased its full-year forecast for UK new vehicle registrations by 2% to 1.83 million, with fleet sales stronger than expected as the market normalises on the supply side.

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That said, a quarter of those questioned by Startline said they believe it will be several years before stock availability appreciably improves.

While concerned about the impact of inflationary pressures and higher interest rates on consumer demand, Vertu said today that it believes constraints in used vehicle supply are likely to persist, which in turn will underpin selling prices and bolster gross profits.

So rather than a flood of stock hitting the market, it seems far more likely that supply shortages are set to gradually unwind. This will keep prices at elevated levels in the medium-term even as the cost-of-living crisis takes potential buyers out of the market.