Used car buyers face a double-whammy of significantly higher prices and difficulties finding available and suitable models, new reports warn.
Values of used motors have been at record levels since the middle of last year as a result of the semiconductor chip shortages limiting new car production and supply to customers.
The average used car price during December rose to £17,816, which is 30.5 per cent higher than the same month in 2020, the latest retail price index from Auto Trader shows.
And more than four in five dealers have responded to a study to say they are finding it difficult to replenish their stock of used cars as consumer demand and sky-high prices show no signs of slowing.
Used car prices up almost a third: Used prices have risen by 30.5% year-on-year, up from £13,652 in December 2020 to £17,816 last month, according to Auto Trader
Auto Trader claims the price of like-for-like second-hand cars advertised on its website last month has risen by more than £4,000 compared to the year previous, when a used car cost – on average – £13,652.
December was the 21st consecutive month that average prices had increased, ‘driven by unique market dynamics, in particular the very high levels of consumer demand in the market,’ says the car sales site.
This is mostly as a result of car buyers facing lengthy delays in receiving orders for new cars, with the chip shortage meaning those who place an order for a model today might not take delivery until 2023.
With consumers unwilling to wait months for deliveries, the shift to the used market pushed the price of one in four ‘nearly new’ models – those less than a year old – above their brand new equivalents.
In fact, in December the average asking price of a nearly new vehicle increased by a colossal 45 per cent when compared with two years prior in December 2019, reaching an average price of £34,429.
Values of used motors have been sky-rocketed since the middle of last year as a result of the chip shortage limiting new car production and supply of zero-mile motors to customers
Used cars that have risen most in price in the last 12 months
Used Seat Alhambras have risen most in value in the last 12 months, according to Auto Trader. The average advertised price in December was £19,038, up from £15,130 12 months prior
1. Seat Alhambra – 50.4%
Dec 2020 price: £15,130
Dec 2021 price: £19,038
=2. Renault Grand Scenic – 47%
Dec 2020 price: £7,694
Dec 2021 price: £10,152
=2. Skoda Octavia – 47%
Dec 2020 price: £12,104
Dec 2021 price: £16,826
4. Ford S-Max – 46.9%
Dec 2020 price: £11,633
Dec 2021 price: £15,142
5. Skoda Yeti – 46.5%
Dec 2020 price: £10,396
Dec 2021 price: £12,739
6. Ford Focus – 45.8%
Dec 2020 price: £10,771
Dec 2021 price: £15,475
7. Land Rover Defender 110 – 45.5%
Dec 2020 price: £58,506
Dec 2021 price: £81,857
8. Hyundai i30 – 43.9%
Dec 2020 price: £9,647
Dec 2021 price: £13,963
9. Toyota Yaris – 42.9%
Dec 2020 price: £10,009
Dec 2021 price: £13,647
10. Ford Grand C-Max – 42.4%
Dec 2020 price: £9,492
Dec 2021 price: £12,189
Source: Auto Trader
Heightened demand is also contributing to an increase in the speed in which cars are selling, Auto Trader’s record show.
Last month, the average used car sold 28 per cent faster than in December 2020, with motors on site for just 32 days (down from 41 days a year earlier).
The two main factors fuelling price growth – supply constraints and strong consumer demand – both show no signs of easing anytime soon
Richard Walker, Auto Trader
Such is the rapid turnaround in cars that used motor dealers have said they are struggling to add to their rapidly diminishing stock of vehicles.
Four in five car dealers say they have seen a surge in used cars in the last six months, accordingly to research by Close Brothers Motor Finance.
Its latest Dealer Satisfaction Survey of 200 motor retailers across the UK found that more than half have seen a ‘significant’ increase in demand for used car stock, whilst 26 per cent have seen a ‘slight’ increase.
The vast majority (83 per cent) of dealers say the semiconductor shortage has meant there simply is not enough stock to meet current record levels of consumer demand, whilst 88 per cent admit that getting stock for their forecourts has become challenging.
December was the 21st consecutive month that average prices had increased, second-hand car website Auto Trader says
With consumers unwilling to wait months for deliveries of new models, one in four ‘nearly new’ motors (those less than a year old) were listed in December above their brand new equivalents
Will used car prices fall in 2022?
With the semiconductor chip shortage looking set to limit new vehicle outputs throughout this year and brands already quoting lead times of more than a year to customers, experts say there will unlikely be a drop in second-hand car values any time soon.
Insiders have predicted a ‘softening’ to spiraling prices this year, with many questioning how much higher prices of used cars can go.
Richard Walker, director of data and insights at Auto Trader, described 2021 as ‘a remarkable year’ with ‘double-digit growth’ in used car prices and motors ‘flying off forecourts in record time’.
And he warned that this will continue to be the case until new car production returns to full capacity and customers revert their focus away from the used motor market.
He said: ‘The two main factors fuelling the growth in the used car market, supply constraints and strong consumer demand, both show no signs of easing anytime soon.
‘Claims of an imminent ‘bubble burst’ are failing to take these key dynamics into account.’
Looking at December’s price growth on a more granular basis, there was year-on-year price growth for petrol of 31.5 per cent and for diesel 30.9 per cent respectively. It means the average petrol model cost £16,641 last month while diesels were marginally more expensive at £17,672.
Electric vehicles also posted price increases of over 30 per cent.
In terms of models, the seven-seat Seat Alhambra MPV saw the biggest rise in average values, up from £15,130 in December 2020 to £19,038 last month – a year-on-rise increase of 50.4 per cent.
The Renault Grand Scenic and Ford S-Max – MPVs of a similar ilk to the Alhambra – also posted average used price rises of 47 per cent.
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