Trade prices for used cars have risen 14% since April.
Car valuation experts CAP HPI have raised their trade prices for used cars by 14% since April. This is a staggering increase in such a short amount of time, and it reveals quite how dramatic the current upwards trend in used car prices really is.
The reasons for this trend are well know at this point. Dampened output of new cars due to the global semiconductor shortage, a subsequent reduction in part-exchanges, and a large market of savings-rich customers looking to upgrade their cars turning to the used market, creating an imbalance between supply and demand. The more pressing question is, how long will this trend continue?
At least until winter, according to Cox Automotive. As the year winds to a close furlough schemes will end, governments will begin to recoup loans, and reductions in lockdown measures will see people spending their money elsewhere. The result will be subdued used car prices.
Increases in new car prices will keep used demand high.
However, even after this point there is reason to believe that prices in the used market won’t drop to their previous levels. This is because manufacturers are likely to try and make up for lost profits by increasing the costs of new cars. As a result, demand for used vehicles will remain buoyed.
In the short term, used car prices are likely to continue to skyrocket. There is no end in sight to the semiconductor shortage and sellers can leverage the scarcity of vehicles for sale to achieve extraordinarily high prices. People are finding that cars they purchased two years ago are fetching almost as much as they originally paid.
Older diesel models are struggling to sell in London.
There is one group of sellers who are not profiting from the general trend in used car prices. Londoners looking to sell diesel models older than 2015 are finding it extremely hard to get find buyers willing to pay good money for their cars. This is because of the new ULEZ charges being levied against pre-EURO 6 models. These charges amount to £12.50 a day, which is obviously a major turn off for any Londoners looking for a new car.
However, outside of London the values of these vehicles begin to benefit from the same factors that are pushing used prices through the roof. Motorvate works with dealers across the country, and so is able to find buyers not put-off by the issue of ULEZ charges, resulting in much higher prices for these vehicles than would be possible to achieve selling them in London.