One in five nearly-new cars are now selling at more than their brand-new equivalents, as disruption to supply chains continues to push used cars to record values.
The closure of forecourts because of Covid and an ongoing shortage of semiconductors are the main forces behind a major mismatch of supply and demand, which has been worsening over the last few months. The average price of a used car on Auto Trader’s marketplace has increased 29% over the last year, according to its latest figures. Average prices are up more than £4,200 in just six months.
The bizarre spectacle of nearly-new cars selling for more than their brand-new price has been fuelled by buyers having to join long waiting lists for new cars, prompting them to head to the secondhand market.
Nearly-new cars are those up to a year old. Among those selling above their brand-new price are models of the Smart Forfour, the Toyota RAV4 and the Volkswagen Tiguan.
It comes with the entire used-car market seeing record prices. Of the 10 models that saw the least price growth since the start of last February, only the bottom three models actually saw a drop in price on Auto Trader’s site. The average price for a car on its site is more than £20,000 and has increased for 93 consecutive weeks.
Ian Plummer, Auto Trader’s commercial director, said that there was little prospect of a swift “bubble-bursting moment” that would see second-hand prices return to lower levels. “In terms of new cars, we estimate that probably about a million and a half cars fewer were sold in the two years of 2020 and 2021,” he said. “I think the market will still be half a million or so shorter than it would ordinarily be this year. On top of that, more generally, there is a huge appetite for car ownership.
“Supply and demand are simultaneously swinging quite dramatically away from each other. I’m sure this will narrow over time, but it doesn’t feel like there’s going to be radical changes in either metric very quickly.”
The number of used cars exceeding the price of their brand-new versions is not limited to the UK. Manufacturers, including Ford, Volkswagen and Toyota, have all recently said that they are still struggling to deal with the impact of the semiconductor shortage hitting production targets.