In 2022, used car prices will stay high after record rises the previous year as similar market conditions will prevail in the United Kingdom, experts predicted. In 2021, used car prices increased sharply as demand was high relative to supply. In other words, there were a lot of drivers buying from a small pool of vehicles. Prices would have been far lower if there were only a handful of motorists picking from an overly large pool of vehicles.
Why used car values were high
Demand for used vehicles was high as drivers faced longer than typical waiting times to get new cars delivered. One reason was that manufacturers struggled to buy the semiconductors needed to build vehicles. They were not available in the required quantities.
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Semiconductors were in short supply as coronavirus impeded the factories that built them and made it hard to transport goods worldwide. Additionally, there was extra demand for electronics that used semiconductors such as laptops. Sales rose as people needed equipment to follow the government’s ‘work from home’ order.
The lack of new cars had significant consequences. Drivers were reluctant to trade-in their existing cars as they could not get their favoured new replacements. Also, many of those that did purchase were forced to buy used rather than new. Motor traders then had greater demand for used cars but fewer opportunities to source stock as there were not many trade-ins. Used prices rose accordingly, and experts suggested there is no short term solution.
Auction specialists comment
Alex Wright, Managing Director of Shoreham Vehicle Auctions, said: ‘In 2022, the market will hinge on the dynamics of supply and demand. With no signs of major sources of stock coming into the market, dealers will have to compete to buy the stock that is available which will keep prices high. The current market will continue throughout 2022. However, 2023 is likely to see used car supplies increase and prices start to soften’, Mr Wright concluded.
Martin Potter, Managing Director of Aston Barclay, echoed such comments. He said: ‘Many car makers are saying that it will be Q3 2022 before they are likely to see production back to 100 percent of what it was before coronavirus. Even then, they will have to fulfil the existing order books. Demand and prices are likely to remain high during 2022. They will only start to soften if volumes get to the stage of supply exceeding demand’, Mr Potter emphasised.
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