The phrase "stock-constrained normal" is not just another industry buzzword. It describes the reality on every UK forecourt this year. While used car transactions reached over 7.8 million in 2025, a 2.2% increase, the headline growth hides a struggle that most dealers feel every Monday morning when they check their sourcing channels.
The used market is currently healthy in terms of demand, but it is structurally broken in terms of supply. In 2026, we are finally hitting the "cliff edge" of the pandemic production gap.
Between 2020 and 2022, roughly 2.5 million new cars were never built or sold in the UK. For a few years, this mostly affected "nearly new" stock. In 2026, that gap has matured. It has moved directly into the five-to-seven-year-old age bracket, the "golden stock" that typically drives volume for independent dealers and brokers.
Auto Trader data suggests that the volume of five-to-six-year-old cars in the market will drop by 25% to 30% this year compared to 2024 levels. This is not a temporary dip; it is a permanent hole in the vehicle lifecycle. Dealers are now fighting for a much smaller pool of inventory, which is pushing acquisition prices up and squeezing the life out of retail margins.
It is no longer enough to just show up at an auction. Motorway’s recent research found that 78% of dealers are more worried about stock availability now than they were last year. Sourcing has become a national competition. Because digital platforms allow every dealer in the country to bid on the same private stock, you are no longer just competing with the garage down the road. You are bidding against the "entire country," which naturally inflates the premium you have to pay to secure a decent unit.
Rising preparation costs are adding a second layer of pressure. Independent dealers report that "prep" costs have doubled in some cases. What used to cost £300 to get ready for the forecourt now frequently hits £700. When you combine a higher purchase price with £700 in tyres, brakes, and reconditioning, the profit margin on a standard petrol hatchback starts to look very thin.
While headlines often focus on electric vehicles, the real action for many dealers is in hybrids. SMMT data shows used hybrid sales jumped 28.6% last year. For a lender like Marsh Finance, this is where we see the most stability. Petrol and hybrid vehicles still account for nearly 90% of all used transactions.
The problem is that everyone wants them. Motorway reported that hybrids currently have the highest bid-rate ratio on their platform. Buyers want the fuel efficiency of a hybrid without the perceived risks of a full EV, and dealers are willing to pay over the odds to get them on the forecourt because they know they sell fast, often in fewer than 30 days.
The "stock-constrained normal" requires a shift in how a business runs. Waiting for the right car to appear at the right price is a losing strategy in 2026. Successful operators are adapting in three specific ways:
In a market where every car costs more to buy and more to prepare, losing a sale because of a narrow finance panel is an expensive mistake. This is where a versatile lending strategy becomes a survival tool.
At Marsh Finance, we help dealers and brokers navigate this "constrained" market by offering non-prime PCP and HP options. When the prime lenders say no, we provide a path to "yes," helping you convert more of those hard-earned leads into actual sales.
The shortages of 2026 are not going away. Supply will remain tight, and prep costs will likely stay high. The dealers who thrive will be the ones who find smarter ways to source, turn their stock faster, and ensure they have the finance tools to close every possible deal.
Unlock non-prime PCP and HP options.
The "pandemic gap" means 2.5 million fewer cars were produced between 2020 and 2022. Those missing cars would have been the five-to-seven-year-old stock that dealers rely on today.
Hybrids and well-maintained petrol cars under £10,000 are currently the fastest movers. High demand and low supply mean these vehicles often leave forecourts within 30 days.
By focusing on stock turn and reducing the time a car spends in preparation. Using a broader finance panel to increase acceptance rates also helps recover the cost of expensive stock.
Yes. The 10-to-15-year-old market has seen price growth of up to 9%, as buyers look for affordability. As long as preparation costs are managed, these can be high-margin units.
Expanding your ability to say "yes" is the best way to offset the high cost of stock. Marsh Finance offers non-prime PCP and HP options that fit seamlessly alongside your prime lenders. We specialise in petrol and hybrid vehicles, helping you secure sales that would otherwise walk off the forecourt. Contact Marsh Finance today to find out how our flexible lending can help you move more stock in a challenging market.
Sources:
https://www.marshfinance.com/blog/navigating-the-uk-car-market-in-2026
https://www.bodyshopmag.com/2026/news/used-car-market-facing-severe-supply-challenges