man in black jacket and blue denim jeans standing beside silver car

Over the past few years, we’ve seen the cost of used cars rocketing, with the average price increasing by around 19.5% in less than 12 months in the UK. While dramatic price hikes in the auto market have been attributed to a number of factors including increased demand, a lack of supply of new vehicles, and global inflation, we’ve finally seen the average price of used vehicles peak, plateau, and start to fall. What does this mean for drivers in the UK? 

Used car demand 

The primary reason for the price hikes of recent years lies in the supply chain – with a combination of factors including the COVID-19 pandemic, shrinking disposable incomes, and microchip shortages leading to a reduction of commercial output, there are now fewer new cars to go around. With a limited supply of new vehicles available, more prospective buyers have turned to the used car market, which in turn has experienced significant supply and demand issues. While this may be bad news for buyers, it could mean that sellers of used vehicles could get considerably more cash for their cars than they would have pre-pandemic. This means that, if you’re thinking of buying a used or second-hand vehicle in the UK today, you may have to contest with price hikes and fluctuations if you want to get the most bang for your buck. Luckily, there’s been a significant plateau in used car prices of late, so if you’ve been holding off to make an auto purchase, now could be the perfect time to get back in the game.     

Used car Demand cools off 

Since mid-2022, there’s been a marked ‘cooling off’ in the used car market, with a total value decrease of 0.9 in June and an average of 2.1 in March and April. With all new car sales in the UK down by 9.7% this year, it’s thought that this price plateauing is the result of a decrease in demand and the alleviation of supply chain problems that have blighted the market since the COVID-19 pandemic. These include a shortage of hardware such as batteries, staffing issues, and logistical problems posed by the Russian invasion of Ukraine. All in all, these price drops represent the first real fall in the used auto market for at least the last 2 years. Interestingly, as we move ever closer to the government’s 2030 ban of conventional petrol and diesel cars, the second-hand electric vehicle (EV) market is on the up – the used battery electric vehicle (BEV) market experienced significant growth of 44.1%, whereas the hybrid electric vehicle (HEVs) market was up by 2.5% per quarter. If you are thinking of purchasing a second-hand car, it could be worth going electric!

Published by HOLR Magazine.