Supply issues in the new car market continue to drive up used car prices, with a quarter of nearly new models now more expensive than factory fresh equivalents.
A shortage of computer chips has led to huge lead times for many new models, which has pushed buyers to the used car market. The result has been massive price growth, with December’s average price being more than 30 per cent higher than in 2020.
Figures from Auto Trader’s Retail Price Index, which analyses daily price data for around 900,000 vehicles, show prices have been on the rise for 21 consecutive months.
The company’s online marketplace reflects the huge demand for used cars that is driving the price growth, seeing a 27 per cent increase in traffic across its platforms compared to normal, pre-pandemic levels in 2019.
Furthermore, the average used car sold 28 per cent faster than in December 2020 – 32 days versus 41.
With new car buyers facing lengthy waits for their vehicles to arrive, many are turning to the used car market. This has set the astonishing precedent where nearly new cars – which are vehicles registered by dealerships that likely only have ‘delivery miles’ – are selling for more than brand-new equivalents.
Auto Trader says the average price of nearly new cars in December was up 45 per cent on December 2019 with almost half of these models within five per cent of the price of a new version.
Richard Walker, Auto Trader’s director of data and insights, said: “2021 was a remarkable year for the automotive industry. Used vehicle pricing saw double-digit growth and used cars flew off the forecourts in record time.
“Despite ongoing restrictions, our sector has remained resilient in the face of significant challenges and is on track for strong continued price growth well into the second half of the new year. The two main factors fuelling this growth, supply constraints and strong consumer demand, both show no signs of easing anytime soon.
“Claims of an imminent ‘bubble burst’ are failing to take these key dynamics into account.”