While those in the motor trade have long known the reasons for rising used car prices, media coverage of the phenomenon has made the situation headline news.
You’ll read countless stories explaining exactly why and how car prices have gone up, including the latest predictions on if/when the car market will ever return to normal.
Here we summarise the main questions we hear from the car buying public.
Why did used car prices go up?
During lockdown, the used car industry put its feet up and held its breath. When the first lockdown ended, an immediate demand began for used cars, driven by customers who wanted or needed to buy during lockdown but weren’t able to. There was also a strong desire by many people not to travel on public transport. These two factors combined led to high demand and in turn prices went up.
After two further lockdowns the used car market reached unprecedented levels of demand at the end of the third lockdown in April 2021. Then the shortage of semiconductors started to affect the new car market.
Are all used cars going up in price?
Used car prices went up on average by almost 30 per cent in 2021, and while high prices started to soften in summer 2022, it’s going to take a long time for prices to drop by nearly 30 per cent back to where they were. Used car prices change month by month, and whilst not every type of car and price bracket has seen price rises, there are still some strong sectors, namely £10,000-£15,000. The under-£10,000 sector was on fire until recently but these cars are starting to appear expensive. Cars over £50,000 have been strong since the start of the pandemic, generally speaking, and prices are still high now.
Are new cars going up in price?
Whilst new car registrations have slumped month on month due to supply issues, the price people are paying for new cars has actually risen. The main reason for this is the shortage of new cars, but another major factor is the average cost of cars being sold has risen as alternative-fuel cars are grabbing a larger slice of the new car market every month. These cars tend to be more expensive than petrol- and diesel-powered cars which is pushing overall prices up.
When will new car deliveries get back to normal?
When the semiconductor crisis began in early 2021, it was believed that the car industry would get back on track by Christmas however, industry experts believe ‘normal’ levels of supply won’t return until mid-2023. While the supply of semiconductors is certainly improving, latest pressures to hit the new car production world have been new outbreaks of Covid-19 in Chinese and Far Eastern factories, and a disruption to the production of wiring looms because of the war between Russia and Ukraine – the latter could still cause problems for new cars for quite some time.
Why are dealers charging so much for used cars?
High demand equals high prices but that doesn’t mean all dealers are blindly rising prices to make a quick profit. High prices they’re paying for stock have a knock-on effect to the forecourt price the customer pays. For consumers, it does pay to shop around if they can as not all dealers are keeping their prices in line with fluctuating market dynamics – so don’t be fooled by the belief that all cars are expensive.
When are used car prices likely to come down?
So far in 2022, used car prices have started to come down gradually, but before you dash out to buy that dream used car, you have to remember a couple of things. Firstly, with used car prices having risen by nearly 30 per cent in 2021 it’s going to take a long time for those prices to fall back to where they were. Secondly, there are not enough used cars around to allow the market to crash. Auto Trader believes there were 1.5m fewer new cars have been sold since 2020, so that’s at least 1.5m used cars coming to the market. And then there’s the effect of the cost-of-living crisis. One thing is for sure, the crazy world of new and used car prices isn’t over yet.
How can you combat the rising cost of used car prices?
Buying a car at auction is extremely appealing as it can save you thousands of pounds off forecourt prices, depending on the make, model and its age The main reason for buying at an auction is that you can purchase a car for a lot less than if you bought it off a dealer’s forecourt, especially given the recent rise in used car prices.
The reason you can save money is you have to do a reasonable amount of legwork yourself before getting to the auction and there could be plenty of pitfalls for the unwary to fall into however, with the assistance of a professional car buyer these pitfalls are few. If you are looking to buy a used car why not take the guess work out by using the services of a professional car buyer.
Professionals get that title for a reason; they know exactly what they’re doing and how to negotiate a good deal. As the public doesn’t have access to most auction houses, they aren’t getting a good perception of just how many cars are available at such cheap prices. You can browse a complete collection of vehicles when buying a car at auction, working with your professional car buyer to draft up a list of vehicles to bid on.
We can attend a range of car auctions across the country to find the very best vehicle and price that suits your needs perfectly. To find out more, or to express your interest in buying from an auction site, please give us a call on 0121 7691729 or 07999 728009. Alternatively, you can fill out our online form here.
