Price of second-hand cars increasing
Why are the prices of second-hand cars skyrocketing?
The price of used cars are going through the roof and while this is good for the seller, it is a much bigger expense for used-car buyers out there.
Why the increase? Well, as most of us are aware by now, there are huge supply chain and production issues in the car manufacturing industry.
The supply chain for parts and components, especially semiconductor chips for new cars has drastically reduced during the last eighteen months due to the obvious global situation.
This has had the effect of reducing the amount of new cars coming onto the market, which in turn, results in a higher demand and higher prices for used vehicles. In fact, some industry experts are now saying that there has never been a better time to sell a second hand car. The only problem is, will you get another used car at a reasonable price? The head of valuations at cap hpi, Derren Martin said:
“Some cars have gone up by 60 percent. If you're looking to sell and not replace, then you’re in a really, really great place because your car has gone up by thousands of pounds.”
Here in Ireland, the waiting list for a new car may be up to six months and over in the UK the wait list for a new car, such as a new Land Rover Defender could be as much as up to 12 months waiting time.
A lot of car owners see that their current car could get a higher price and are looking to cash in. It may be a catch 22 situation. You can get a great price for your car, but any benefits could be cancelled out by a lack of used and new cars to choose from.
One car owner in London, David Strang, who is on the waiting list for a Land Rover for 12 months said, “It's a gamble because you sell the car that you've got that you use as a daily car, you’re taking advantage of the high prices but then you've got no new car coming in in any sort of timeframe”
Land Rover responded to this customer and said, “The global availability of semiconductors is severely impacting the entire automotive industry. Overall car industry manufacturing in the UK is down 40% year on year and the shortage has impacted our ability to meet high global demand for some of our vehicles''
Semiconductors are crucial for car manufacturers as these chips help run everything from digital displays to safety features and stability control systems.
David George, the Director at MINI UK said, “I've been in the industry for a long time, close to 30 years now, and certainly I've never seen a time when there have been so many different determining factors that were impacting the way we operate.”
With all the delays in the new car market, buyers are looking to the used-car market instead. It is becoming a shock to many car owners, when they first realise how much value might be sitting on their driveway.
Many car buyers are also transitioning to electric vehicles and especially hybrids and these sales are now increasing rapidly year-on-year.
With so many customers looking to make the move to EV’s, they are realising that the supply is struggling to meet the rising demand leading to longer wait times for new electric vehicles.
The race is on to meet the targets set by many governments as the sale of new petrol and diesel cars will stop in 2030. You may be able to buy a used ICE vehicle after that date, but if you want to go new, it will have to be electric.
For now, used car prices are remaining high, but car manufacturers are hoping that this year production will start to return to normal levels and the price of used vehicles is expected to find an equilibrium. For now, though, car buyers will need to accept paying a steeper price for the car they want.
Justin Kavanagh is a recognised leader in automotive intelligence and vehicle data supply to the entire motor industry. He has almost 20 years experience in building systems from the ground up. As the Managing Director of Vehicle Management System, he understands the need and importance of trustworthy and reliable vehicle history and advice to both the trade and the public.
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