The latest statistics show that nearly 30 used cars on the market that have been on the road for less than a year cost more than new cars, with a maximum premium of nearly 20%. The average price of a used car in the UK has soared by up to 57 per cent in the past two years.
A global shortage of computer chips used in car production around the world, as well as materials or components such as copper, aluminium and cobalt, has led to fewer new models rolling off the production line. Buyers eager to get their hands on existing cars are turning to used ones.
The value of used cars on the UK market has seen an unprecedented surge, rising by more than a fifth in September 2021 alone.
Prices of the UK’s most popular models have risen 57 percent since 2019, according to statistics on the WEBSITE of the Automobile Association AA.
In addition to the supply of new cars, used-car dealers are also running short of inventory as trade-ins are falling, according to industry data.
Auto Trader, the UK’s largest used car sales platform, says prices have risen for 18 months in a row.
With the COVID-19 outbreak forcing car factories to close for at least six weeks from March 2020, combined with subsequent shortages of computer chips, orders have been packed and delivery times have extended to more than 12 months in some cases.
Demand for a wide range of models is soaring in the UK, with many drivers willing to pay a premium of up to 20 per cent for a car with 10,000 miles on it, according to exclusive figures from vehicle share price specialists Cap HPI.
When used cars cost more than new ones, they usually don’t last long. But if you can’t wait for a new car, prices could be upside down for longer than most experts predict.
The used-car market may level off before it starts to decline, though that may not happen for some time. At present, the semiconductor chip shortage crisis is not over, experts believe it will last until the middle of next year, and then return to normal.
That means there will be far fewer cars on the market and the value added of used cars will continue.
Even if demand falls, the market doesn’t think there will be enough supply to quickly reverse the surge in used-car prices. There is already evidence that second-hand supply is more limited than it was a year ago.
Richard Walker, director of data and insight at Autosales.com, said: “The shortage of new and used car supply has led to a significant acceleration in used car prices, which are now up by more than 20%.
On the face of it, such price increases might be seen as a negative for buyers forced to pay a premium for a replacement. However, similar to moving house, if there is a car to sell, either privately or as part of a swap scheme, the market will rise proportionately, which will help balance growth.
The article is reprinted from Tencent News
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