Supply problems on the new car market are driving up used car prices – a quarter of the almost new models are now more expensive than their brand-new counterparts.
A shortage of computer chips has resulted in tremendous lead times for many new models that have pushed buyers into the used car market. The result was a massive price hike, with the average price in December more than 30 percent higher than in 2020.
Figures from Auto Trader’s retail price index, which analyzes price data for around 900,000 vehicles on a daily basis, show prices have been rising for 21 consecutive months.
The company’s online marketplace reflects the huge demand for used vehicles that is fueling price growth, and saw the volume of traffic on its platforms increase by 27 percent in 2019 compared to normal pre-pandemic levels.
In addition, the average used car sold 28 percent faster than in December 2020 – 32 days versus 41.
With new car buyers having to wait a long time for their vehicle to arrive, many are turning to the used car market. This has set the precedent for almost new cars – that is, vehicles registered by dealers who likely only have delivery miles – to sell for more than brand new equivalents.
Auto Trader says the average price of nearly new cars was up 45 percent in December compared to December 2019, with nearly half of those models being within five percent of the price of a new version.
Richard Walker, Director of Data and Insights for Auto Trader, said, “2021 was a remarkable year for the automotive industry. Used car prices rose in double digits and used cars flew from the forecourt in record time.
“Despite ongoing restrictions, our sector has remained resilient despite considerable challenges and is on course for strong, sustained price growth well into the second half of the new year. The two main drivers driving this growth, constraints on supply and strong consumer demand, are showing no signs of easing anytime soon.
“Claims of impending ‘bubble burst’ do not take these key dynamics into account.”
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