The prices of used cars have surged to an unprecedented level, and drivers are paying more on average than ever to secure a second-hand vehicle.
The pent-up demand from months when dealerships were closed under Covid-19 lockdown restrictions has been unleashed, and drivers rushed to buy used cars in the same way they did when the first lockdown ended in the summer of 2020.
However, the key difference this time is the global shortage of semiconductors. This has resulted in a reduced supply of new cars, meaning a higher proportion of those looking to replace their existing car are turning to the used car market. This, in turn, has caused supply and demand issues.
BuyaCar.co.uk, an online car retailer and sister site of Yacarros.com, has seen the average price of a used car sold on its platform increase from £13,108 in January to a record high of £15,399 in May.
Peter Gibney, Chief Operating Officer of BuyaCar, said that inflated post-lockdown prices only lasted a couple of months in 2020 but is expected to last much longer this time.
“Since the forecourts opened on April 12… dealerships have been inundated with people,” he said. “In preparation for that, talking to dealers, they said they were booked up for test drives for weeks.
“It seems to persist, and it’s not just necessarily that demand is high, it’s just that supply is very low.”
BuyaCar’s data shows that these inflated prices have not deterred buyers, with a continued trend of customers opting for more expensive and better-equipped models. Gibney suggests this may be because people have more disposable income as a result of the lockdown keeping them at home and reducing transportation costs. He also noted that the situation has translated into higher part-exchange offers for buyers.
One of BuyaCar’s most popular models, the Mercedes A-Class, has gone from an average selling price on the platform of £14,998 in January 2021 to £17,371 (approx. US$25,000) in May 2021. Other statistics from valuation service provider cap hpi show similar trends for other models.
The average valuation of a MINI Cooper S with cap hpi increased by 18.2% in May 2021, while the Renault Kadjar and Jaguar XF rose by 17% and 15.7% in value in the same period.
