The growth in the value of used cars has doubled in just three months amid supply shortages in the new car market, according to new data. Figures released by online used car marketplace Auto Trader show the average price of a used car hit £15,288 in August, marking 17 consecutive months of increases.
The Auto Trader data, which is based on analysis of around 900,000 used cars, shows price growth hit an all-time high in August, with a 17.2-percent increase in prices compared with the same month in 2020. That’s more than double the growth recorded in May, when prices were up by more than eight percent.
According to the website, the increases have been fuelled by “massive levels of consumer demand” in light of supply issues impacting the new car market. With a global semiconductor shortage affecting factories’ ability to churn out new vehicles, customers are having to wait longer for new cars, leading some to turn to the used car market.
As a result, the company claims there were 70.2 million cross visits to the site in August, up by 36.4 percent on the same period in 2019. It’s also a record level of demand for the month of August, and the second-highest number of visits ever recorded in a single month. Furthermore, Auto Trader says consumers spent 10 million hours researching cars on the site, which is an 18-percent increase on the same month in 2019.
In Auto Trader’s August consumer sentiment survey, a quarter (25 percent) of the 2,200 buyers quizzed said they planned to buy a used car in the next three months, while 39 percent planned to buy within two weeks. Perhaps more pertinently, 26 percent of those questioned said they thought car ownership is more important than it was before the coronavirus pandemic, while half felt more confident in their ability to afford their next car than they did a year ago, despite rising prices.
In fact, Auto Trader is so buoyed by the “health” of the used car market that the company expects around eight million used car sales in 2021. By the firm’s own admission, that’s higher than others have predicted, but it says the figure is “a more accurate reflection of current levels of consumer demand”.
“To put the price movement into context, in August 2020 average prices were increasing at a rate of six percent year-on-year, which at the time marked a new record,” said Auto Trader’s director of data and insight, Richard Walker. “While few could have imagined a year later, growth would be accelerating at nearly three times that rate, we’ve said throughout the pandemic that we anticipated sustained levels of growth fuelled by the strong consumer demand in the market, even when other commentators predicted a collapse in prices.
“The data still indicates exceptionally strong levels of used car demand, which has been given an additional boost from the ongoing new car supply constraints. With what we’re observing we expect the growth rate to continue for some time to come.”