Second-hand car prices fall for first time in two years


The average price of used cars fell for the first time in over two years, as supply chain problems started to ease for manufacturers. 

New inflation figures from the Office for National Statistics show that the price of second-hand cars fell by 2.7pc in the year to October. 

This is the first month that it has gone negative since the onset of the pandemic. However, it follows 23pc growth in the year to October 2021, meaning that prices are still much higher than before Covid. 

“[It] reflects that hopefully things are opening up in the new market and some of the supply side constraints will start to ease particularly around chips,” said David Bailey, professor of business economics at Birmingham University. 

Annual used car prices have soared by as much as 30pc during the past year, although the growth started slowing down in spring. 

The spiralling costs meant that some models were cheaper used than new at one point. Supply chain issues from lockdowns and a shortage of semiconductor chips drove the increase. 

Demand was also up from people wanting to buy a car to avoid catching Covid on public transport, Prof Bailey said.

Official data last week showed that the UK has likely entered a recession, with negative growth for the first time since the pandemic. This would usually mean a fall in demand for new cars.

“Normally, people might switch to used cars because they’re more affordable. But it’s not clear this time. It might be that because people have been waiting for a new car for a long time. There’s plenty of pent-up demand,” Prof Bailey said. 

However, a spokesman from car marketplace Auto Trader cautioned that it is too early to talk about prices coming down despite the turn in official figures. 

Its figures, which are based on 900,000 price observations every day across the whole retail market, show that asking prices – as opposed to selling prices – were 5pc higher in the first two weeks of November than a year ago.

“Broadly speaking, average prices are up around £2,000 on what we would normally expect to see,” the spokesperson said.

“Contrary to some speculation, from what we’re seeing in our data, there’s no “crash” in used car prices in sight, but rather a gradual return to the levels we saw pre-pandemic.”



Read More: Second-hand car prices fall for first time in two years

2022-11-16 11:56:00

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