As new car prices have fallen, traditional buyers of three-year-old cars have migrated to nearly new or brand new vehicles as they become more affordable.
But according to Glass's Guide, this switch has been repeated further down the used car chain, so car buyers whose budget used to stretch to a five or six-year-old car have now found themselves able to afford a three-year-old model.
Chris Smith, car editor for the used car valuation guide, said dealers specialising in cars of five years or older were being driven out of business.
He said: 'Customers who could once afford a six-year-old car can now afford one that is three-years-old or younger. Combined with a series of economic factors, it is no wonder the two- to four-year-old car range is the busiest sector of the used car market.'
Figures from the Centre for Economics and Business Research show that relative to average earnings, the price of a new car has fallen by 30% since 1998. However, there is a downside to the shift towards newer cars, as car dealerships are having to take many more very old cars as part exchanges, which are generally unwanted.
Smith said: 'The pressure is now on for auction houses to take the place of these independent dealers and this goes some way to explaining the increase in private buyers attending auctions.
'Some sales seem like a family day out, with toddlers, pushchairs and the dog all lined up at the rostrum.'
Auction houses have also highlighted a good trade turnout and high conversion rates that all suggest a buoyant market.
But Adrian Rushmore, managing editor of Glass's Guide, warned: 'The major threat is that part-exchanges and rental defleets will be reaching the trade in ever-increasing numbers and dealers will be transferring their demonstrators into used car stock. The good news is that the market moves into October in a more stable and upbeat condition than it did this time last year.'